SINGAPORE – Global food and agri-business, Olam International through its wholly owned subsidiary, Olam West Coast Inc., has entered into an agreement to sell the real estate assets of its onion and garlic processing facility in Gilroy, California for US$110.3 million.
The company will sell the assets to Chicago-based investment management firm Mesirow Financial.
Olam has also entered into a tiered revenue sharing arrangement with Mesirow with whom it will share a part of the annual revenue from operating the assets for a period of 25 years.
Olam’s Managing Director and CEO of Spices, Greg Estep said: “We are pleased to have secured a long-term tiered revenue sharing agreement with Mesirow Financial for operating the onion and garlic assets for our U.S. Spices business.
“As a large, leading financial services firm in the U.S., Mesirow has been a long-term partner of many large corporations in real estate transactions so I am confident our partnership will go a long way towards creating value for our respective stakeholders.
“I am excited about our next phase of growth as we can now redeploy part of the capital released for investments in product innovation and value-added services to create further value for our customers.”
The Mesirow team was led by Senior Managing Director Garry Cohen of Mesirow Financial’s Sale-Leaseback Capital Division, who stated “We are very excited about the prospect of closing this transformative acquisition with Olam on one if its most strategic assets in the US.
“Due to the incredible degree of cooperation between both sides to get to this point, we expect this to be the first of many transactions together forming a terrific long-term relationship.”
The transaction is expected to be completed in December 2019, subject to customary conditions.
On completion, Olam will receive cash proceeds of US$110.3 million and is also expected to book a one-time pre-tax capital gain of approximately US$97 million.
In addition to this transaction, Olam revealed that it is also currently engaged in various discussions for divesting and/or restructuring various assets and businesses in line with the Strategic Plan, some of which the company expects to be concluded in this financial year.
However, Olam declined to quantify the financial impact of the planned transaction – whether arising from such divestment or from the company’s remaining investments – citing that they are subject to multiple factors outside the company’s control.
The company plans to reveal the scale in the full year financials.