Olam Group's stock surged 3.53% in Monday's pre-market trading session following the announcement of a major strategic restructuring plan. The Singapore-based food conglomerate revealed its intention to focus on its food ingredients business while divesting all remaining assets and businesses over time.
The company disclosed plans to invest $500 million in its food ingredients business, Olam Food Ingredients (OFI), and allocate $2 billion to deleverage its balance sheet. This strategic move aims to unlock potential value, with Olam exploring options for a concurrent listing of OFI in Europe and Singapore. The investment in OFI is expected to strengthen the company's position in the high-growth food ingredients sector.
Investors responded positively to Olam's commitment to shareholder value, as the company announced plans to restart share buybacks and distribute proceeds from future asset sales via special dividends. The restructuring will be funded by the $2.58 billion proceeds from the sale of its stake in Olam Agri to Saudi Arabia's SALIC, along with future divestment proceeds. This strategic shift comes as Olam aims to enhance its resilience amid macroeconomic uncertainties and strengthen its overall financial position.
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