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Olam sells 20% stake to Mitsubishi Corp. for $1.53 bil

SINGAPORE (Aug 28): Japanese conglomerate Mitsubishi Corp. is acquiring a strategic stake in commodities trader Olam International for $1.53 billion.

Under the subscription agreement, Olam will sell an aggregate of 332.73 million new shares representing 12% of the enlarged share capital to Mitsubishi at an issue price of $2.75 each, a 44% premium to the last price for Olam before trading in its shares was halted on the Singapore Exchange early Thursday.

Separately, Mitsubishi will also acquire another 222 million shares from the founding members of the Kewalram Chanrai Group, representing 8% of the enlarged share capital of Olam.

On completion of both these transactions, MC will become Olam’s second largest shareholder with a 20% shareholding in the company.

Temasek Holdings will remain Olam’s majority shareholder with a 51.4% controlling stake.
It says 44% premium, not discount.
(28-08-2015, 09:54 AM)egghead Wrote: [ -> ]It says 44% premium, not discount.

Ops. my apologies. The post is corrected. Thank you.
Olam, Mitsubishi eye cooperation in Africa, Indonesia, Myanmar

SINGAPORE (Aug 28): Mitsubishi Corp's purchase of a 20% stake in Olam International will enable the two companies to expand and improve production of their various assets globally.

“We intend to set up a Mitsubishi-Olam JV in Japan for the distribution of Olam products...With Mitsubishi's distribution presence and manufacturing presence in Japan we will be able to gain market share,” says Sunny Verghese, chief executive officer of Olam.

He adds they were looking at other areas where the two firms can working together in places such as Africa, Indonesia and Myanmar.

“By partnering with Mitsubishi we believe that we will be able to get technology transferred to allow us to take our rice farming and milling investment to Nigeria to full potential.”

Olam is up 10% at $2.10 as at 11.07am.
Wrong term they will be fine...

Olam on $2.7b shopping trip as food prices fall

LONDON • Singapore-listed commodity major Olam International is ready to deploy US$2 billion (S$2.7 billion) on acquisitions to take advantage of slumping agricultural commodity prices.
"We are begging to enter a buyer's market," said chief executive officer Sunny Verghese in an interview. "We will do bigger deals that really move the needle for us."
Temasek Holdings has a 51 per cent stake in the company.

Mr Verghese revealed the acquisition plans less than a month after Mitsubishi Corp bought a 20 per cent stake in Olam for about US$1 billion - a sign that Asian trading houses are betting on growth of populations and wealth in the region to spur demand for higher-quality food.
It also signals changing fortunes for Olam, a firm that a few years ago was fending off an attack from United States-based short-seller Muddy Waters and doubts over its finances.
With the Mitsubishi funding helping to ease those concerns, Mr Verghese, who has run Olam since its founding more than a quarter of a century ago, is ready to switch up his acquisition strategy to benefit from a rout in food markets.
Global prices have dropped to their lowest since April 2009, according to the United Nations Food and Agriculture Organisation.
Weakness in emerging-market currencies and the potential for higher interest rates are also Olam's allies as they depress asset valuations, Mr Verghese said.
The firm raised $915 million in August selling a 12 per cent stake to Mitsubishi, which bought 8 per cent more from existing shareholders. The cash from the transaction, leveraged with about $1.8 billion of debt, would bring Olam's firepower to about $2.7 billion, Mr Verghese said.
That feeds into a plan to shift away from the company's smaller transactions of the past, some barely above the US$10 million mark.
"The US$100 million-US$200 million range will be our sweet spot," Mr Verghese said. "But we will do fewer of them. We will be very disciplined and selective."
The company's latest deal is even bigger than that. Its purchase of Archer-Daniels-Midland's cocoa business for about US$1.3 billion is due to close next month.
Olam has a pipeline of potential deals in Africa, said Mr Verghese, declining to elaborate. Mitsubishi said when it bought its stake that it expected expansion in the continent.
While Olam is not a household name, it ranks among the top food-commodity traders, particularly in cocoa, nuts, wheat and rice, supplying companies such as PepsiCo. The trader says that one in eight of all chocolate bars eaten around the world is made from beans that it handles.
Temasek took a controlling stake in March last year to fend off Muddy Waters. The short-seller, led by Mr Carson Block, in 2012 queried Olam's ability to generate cash and the quality of its African operations, causing its stock to plummet.
The acquisition by the Singapore state investor also shows Asian companies' efforts to muscle in on an agricultural trading industry dominated by US and European houses.
This seems to be no stop to Olam's expansion dreams. For almost 10 years, it has been expanding. Eventually there will be no more acquisition for it and hopefully free cash flow will come in. When will it happen? I am interested to know when about 1% of our nation's fortune is tied to it.

This one less worries as it is now a listed pte entity of Temasek... just let them sort out over wrong term...
Defeated the purpose of listing really especially if company's fundamentals are that sound since it is 85% owned by Temasek, Mitsui and the family... in fact they have been actively enjoying the limelight prior to Muddy Waters...

Olam in a very good place today: CEO
It has refocused its strategy after a shortseller attack three years ago and is now back on its growth trajectory

e migrating from doing a lot of transactions to doing fewer but larger transactions, but these have to be along our prioritised platforms and consistent with our corporate strategy," said Mr Verghese. 
OCT 30, 20155:50 AM
THREE years after a damaging shortseller attack sent shares of Olam International spiralling to unseen depths, the company has firmly emerged from the shadow of the crisis and is now set on the growth trajectory again.
This comes after the firm refocused its strategy and...

Er... how come I don't see short sellers in blue chip stocks like banks, telcos or even reits...
(31-10-2015, 09:12 AM)greengiraffe Wrote: [ -> ]Defeated the purpose of listing really especially if company's fundamentals are that sound since it is 85% owned by Temasek, Mitsui and the family... in fact they have been actively enjoying the limelight prior to Muddy Waters...
ya lor, they should exit SGX by offering to buy back all public shares at least $2.50.

this way, as a pte entity, no need to face another 'muddy water' attack anymore.
ADM is a shrewed acquirer... they are not stupid... for them to sell, it means they have their own unique view on that part of the investments

Olam, flush with cash from loans as well as its share of a more than US$1 billion investment by Mitsubishi Corp, plans to take advantage of a commodities rout that it has called a US$2 billion opportunity for acquisitions. Pacific Investment Management Company said last month the worst of the collapse is probably past, after a 26 per cent tumble in raw materials' prices in the 12 months through September.

"After the Temasek stake acquisition, credit spreads have narrowed and they have found it easier to borrow," said analyst Abhijit Attavar at Jefferies Group. "There was a point when management was preserving cash, but now they can again go into acquisitions."

Olam plans to pursue deals of between US$100 million and US$200 million, a shift from its previous strategy of smaller acquisitions around the US$10 million mark, chief executive officer Sunny Verghese said in September.

The food trader's latest deal is even bigger: a US$1.2 billion purchase of Archer Daniels-Midland Co's cocoa business last month.