The deal implied an equity valuation for Olam Agri of US$4 billion. That’s 23% higher than the current market capitalisation of the group company.

Olam Group’s share price jumped after one of the world’s biggest cocoa and coffee merchant said it sold a stake in its agribusiness unit to a state-owned Saudi Arabian investment firm. 

The stock rose by as much as almost 9% to $1.23 apiece in Singapore on Monday, before paring gains.

Saudi Agricultural & Livestock Investment Co., controlled by the country’s sovereign wealth fund, will buy a 44.6% holding for US$1.78 billion in Olam Agri Holdings, the Singaporean trader said in a stock exchange filing earlier today.

The acquisition will give the Saudis fund 80.01% of Olam Agri, and then three years to exercise a call option on the remaining 19.99%. The deal implied an equity valuation for Olam Agri of US$4 billion ($5.33 billion), the Singaporean company said. That’s 23% higher than the current market capitalisation of the group company, it said.

SALIC bought just over a third of of Olam Agri for US$1.24 billion in 2022. The firm is a unit of the Public Investment Fund and aims to achieve food security for the kingdom, investing domestically and overseas.

Olam Agri, which sells grains and seeds and makes everything from edible oils to pasta, is one of Olam’s main units. It was created during a reorganization in early 2020. The Persian Gulf region is a growing market for the commodities that Olam supplies and Saudi Arabia has placed a strong emphasis on food security.