Olam Agri’s Australian assets include Mt Tyson Seeds, a 10,000t storage and container-packing site south-west of Toowoomba.

SINGAPOREAN-BASED agribusiness, Olam Group, has confirmed it has received an offer from state-owned Saudi Agricultural and Livestock Investment Company (SALIC) to purchase the remaining stake in Olam Agri.

SALIC currently owns a 35.4 percent stake in Olam Agri, which it acquired in 2022 as part of a Strategic Supply & Cooperation Agreement between the parties.

Olam released a statement to the Singaporean Exchange (SGX) on Friday following an article published by Bloomberg which speculated that a deal between the two parties was being negotiated.

The statement confirmed that the company had “received a non-binding indicative offer” from SALIC for Olam’s stake in the agribusiness unit, and was “presently exploring with its appointed advisers the sale of such stake”.

“While the company is reviewing and in discussions regarding a potential sale of its stake in the Olam Agri business, the company would like to stress that no definitive terms or formal legal documentation have been agreed upon between the parties to date,” the statement said.

“There is no certainty that a sale of the company’s stake in the Olam Agri business will proceed or will materialise.”

Alongside Olam Food Ingredients, Olam Agri is one of two divisions within the Olam Group.

The Olam Agri segment manages the Queensland Cotton business, which includes six gins, and several warehousing facilities located across Qld and New South Wales, and a pulse packing and trading operation.

Olam Group’s association with SALIC began in 2022 when the Saudi Arabian firm paid US$1.24 billion for a 35.4pc stake in the agribusiness.

In a statement released at the time, SALIC’s group chief executive officer Sulaiman Al Rumaih said the investment was in line with the company’s goal to advance “food security”.

“SALIC’s key strategic objective is to contribute to global and domestic food security through long-term strategic investments in the local and international markets,” Mr Al Rumaih said.

“Our partnership with Olam will expand SALIC’s international footprint and increase access to strategic commodities.

“SALIC will leverage its international investments and local portfolio companies to strengthen its position across the agri-food value chain as a global food security player.”

Proposed demerger, IPO

Following the agreement, Olam announced its intention to demerge the agribusiness group and list the independent holding concurrently on the SGX and the Saudi Exchange of the Kingdom of Saudi Arabia.

In the statement released last week, Olam has said it was still considering all options, including an initial public offering, for its Agri division.

“Whilst the company focuses on completing the discussions for the aforementioned potential sale, the company will also continue to monitor the various conditions guiding its decision in relation to the IPO and concurrent demerger for Olam Agri.”

It was anticipated that the demerger and IPO could take place as early as the first half of 2023.

Olam subsequently announced a delay in the timeline for the process and “that will also concurrently explore other strategic options”.

In August, Olam Group co-founder and CEO Sunny Verghese said the business was still working through options for the business divisions.

“We remain committed to executing our reorganisation plan to unlock value,” Mr Verghese said.

“We continue to evaluate all internal and external factors that would underpin the success of the proposed IPOs of OFI and Olam Agri, while exploring all other strategic options.”

SALIC Australian investments

SALIC also has existing investments in Australian agriculture via Merredin Farms and Minerva Foods, both based at Western Australia.

Meredin Farms, jointly owned by SALIC and WA-based investor PenAgri, was offered to the market in January.

The portfolio was purchased primarily as a grain farm through SALIC’s 2019 acquisition of leased and freehold country totalling 200,000ha.

It was taken off the market before being relisted in September as two portfolios, the 37,553ha Bodallin Aggregation and the 40,401ha Warralakin Aggregation.

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