SINGAPORE – Global food and agri-business Olam International has entered into an agreement to sell its remaining 50% stake in Indonesian sugar joint-venture, Far East Agri to its joint venture partner Mitr Phol Sugar Corporation.
The transaction involves a total consideration of between US$82.5 million and US$85 million, subject to final adjustments as provided in the sale and purchase agreement.
The transaction is expected to be completed by end-March 2020, subject to customary closing conditions.
Upon completion, Far East Agri will cease to be an associated company of Olam. Olam expects to book a post-tax capital gain of approximately US$37.5 million to US$40 million on completion of this Transaction.
Olam said that the sale of its shareholding in the sugar joint venture is in line with its six-year Strategic Plan announced in 2019.
Under the plan, Olam will focus on businesses with sustainable growth potential and divesting and/or restructuring de-prioritised assets and businesses to release capital and redeploy to the prioritised businesses.
This has seen the company re-organise its diverse business portfolio into two new operating groups; Olam Food Ingredients and Olam Global Agri.
Olam’s operations will now focus on food ingredients and global agri-business as part of the company’s strategy to reposition the business for further growth in line with key consumer trends and market opportunities.
The Olam Global Agri (OGA) will include the differentiated businesses of grains and animal feed, edible oils, rice, cotton and commodity financial services.
The Olam Food Ingredients (OFI) unit will consist of Olam’s businesses of cocoa, coffee, edible nuts, spices and dairy and will offer value-added food products and ingredients.
The company has also sold 89,085 megalitres of its permanent water rights in Australia for A$490 million (US$332.5m) and approximately 12,000 hectares of almond orchards and related assets in Victoria, Australia.
The restructuring has also seen the company divest its real estate assets of its onion and garlic processing facility in Gilroy, California for US$110.3 million and acquire 100% interest in Californian almond processor and ingredient manufacturer Hughson Nut Inc (HNI) for US$54 million.
Even as Olam moves ahead with the re-organisation, the company said that it continues to execute on the four strategic pathways for growth as set out in the 2019-2024 Strategic Plan.