After the completion of the 44.58% stake sale, Olam Group has the option to sell its remaining 19.99% stake in Olam Agri to SALIC three years later.

Olam Group announced on Feb 24 that it will sell its remaining 64.57% stake in Olam Agri to Saudi Agriculture & Livestock Investment Company (SALIC), a state-owned Saudi investment firm.

The group will first sell its 44.58% stake — or 1.51 billion shares — SALIC for around US$1.78 billion ($2.35 billion), which will see SALIC owning a controlling stake of 80.01% in Olam Agri.

The sale puts Olam Agri’s implied 100% equity valuation at US$4 billion and represents a 14% premium to the US$3.5 billion valuation when SALIC first acquired a 35.43% stake in Olam Agri in December 2022 for U$1.29 billion.

After the completion of the 44.58% stake sale, Olam Group Vc2 Vc2 has the option to sell its remaining 19.99% stake in Olam Agri to SALIC three years later.

The put option to sell is exercisable at a base consideration of US$799.6 million, an amount of additional consideration equal to US$197,162 per day multiplied by the number of days from and including June 1 up to the completion date of the agreement.

The amount should also include a 6% internal rate of return (IRR).

According to Olam Group, the implied 100% equity valuation for Olam Agri is 23% higher than Olam Group’s market capitalisation of US$3.25 billion. The group currently consists of Olam Agri, ofi and the remainder of the group.

Upon the completion of the 44.58% sale, Olam Group will realise an estimated gain on disposal of US$1.84 billion. The latest valuation represents a 3.47 times P/B multiple to Olam Agri’s book value of US$1.15 billion

Olam Group first proposed the demerger of Olam Agri in March 2023, where it had been working towards the latter’s IPO on the Mainboard of the Singapore Exchange S68. The group was also exploring a possible listing of Olam Agri on the Saudi Arabia Stock Exchange at the same time.

The group then announced the delay of the IPO and demerger in May 30 saying the necessary regulatory approvals had yet to be obtained. 

Olam Group had previously received a non-binding offer from SALIC in November 2024 that valued Olam Agri Holdings at around US$4 billion.

Shares in Olam closed 1 cent lower, or 0.88% down, at $1.13 on Feb 21.