The Saudi Agriculture & Livestock Investment Company (SALIC) has announced plans to acquire a controlling 44.58% stake in Olam Agri Holdings (Olam Agri) for approximately $1.78 billion. This acquisition, which forms part of a broader transaction, will raise SALIC’s total ownership of Olam Agri to 80.01% upon completion of the first tranche.
The deal marks a significant expansion of SALIC’s investments in global agribusiness, reinforcing its strategic commitment to securing reliable food sources amid shifting global agricultural supply chains. For Olam Group Limited (OGL), the parent company of Olam Agri, this transaction represents a major step in its long-term divestment strategy, generating substantial financial returns while repositioning the group’s focus on its remaining businesses.
The Breakdown of The Deal
Under the agreement, SALIC’s purchase will unfold in phases. Following the completion of Tranche 1, OGL will retain a 19.99% stake in Olam Agri. However, OGL has negotiated a put option that allows it to sell its remaining shares to SALIC on the third anniversary of Tranche 1’s completion. This means that OGL will have the flexibility to fully exit Olam Agri in 2027 if it chooses to do so.
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The financial windfall for Olam Group from this sale is substantial. Upon the completion of Tranche 1, the company is expected to realize an estimated disposal gain of $1.84 billion, which will be added to OGL’s equity reserves. Furthermore, the combined proceeds from Tranche 1 and the anticipated second tranche (Tranche 2) will generate approximately $2.58 billion in gross cash inflows.
OGL’s Board has outlined that it will carefully assess several strategic considerations before deploying these funds. The company is weighing potential allocations toward debt repayment, capital restructuring, reinvestment in core business areas, and the possibility of a one-time special dividend to shareholders.
The sale aligns with Olam’s broader restructuring efforts. Once Tranche 2 is completed, Olam will have fully divested from Olam Agri, including the previous 35.43% stake sale in 2022. This total divestment is expected to generate gross proceeds of $3.87 billion, significantly boosting Olam Group’s financial reserves by $2.72 billion.
After parting ways with Olam Agri, OGL will continue to retain full ownership of Olam Food Ingredients (ofi) and the Remaining Olam Group. The company is actively exploring strategic options to unlock value from these businesses, including a potential IPO for ofi, which could further enhance shareholder returns and reposition the company within the global food sector.
SALIC’s Investment Strategy
For SALIC, this acquisition is not just about expanding its portfolio—it is a strategic move aimed at reinforcing food security through investments in high-potential agricultural businesses. The company has long pursued a strategy focused on securing stable food supplies through partnerships, acquisitions, and vertically integrated supply chains.
SALIC gains greater control over a key global agribusiness player by increasing its stake in Olam Agri to 80.01%, enhancing its ability to influence food production and distribution on a global scale. Olam Agri’s operations, which span critical agricultural commodities such as grains, edible oils, and animal feed, are expected to play a vital role in supporting Saudi Arabia’s food security objectives as the country works to reduce its dependence on food imports and secure reliable supply sources.
In a statement on the deal, SALIC reaffirmed its confidence in the partnership, stating that “the strengthened relationship with Olam Agri will further its mission of investing in innovative food and agriculture businesses that contribute to global and national food security.”
The transaction also reflects broader global trends, where sovereign-backed investment funds are increasingly prioritizing food security as a strategic imperative. As climate change, geopolitical tensions, and supply chain disruptions continue to pose risks to global food production, countries are doubling down on securing essential agricultural assets—and SALIC’s deepened partnership with Olam Agri is a clear example of this approach.
What’s In It for Olam Group?
For Olam Group, this deal is a continuation of its broader corporate restructuring strategy, which has seen the company streamline its business model by focusing on its highest-value assets. While Olam Agri has been a cornerstone of the group’s operations, the divestment allows Olam to redirect capital and management resources toward its remaining businesses.
Olam’s full ownership of ofi, which specializes in food ingredients such as cocoa, coffee, dairy, nuts, and spices, positions the company to explore new growth avenues in premium food markets. The potential IPO for ofi, if pursued, could provide Olam with an additional capital boost, enhancing its ability to invest in higher-margin businesses with strong consumer demand.
Moreover, Olam’s Remaining Group will continue operating and managing assets that do not fall under ofi or Olam Agri, ensuring that the company retains a diversified footprint in global agribusiness.
However, the Olam-SALIC deal is emblematic of the shifting dynamics in global agriculture and food production. As nations place emphasis on food security and supply chain resilience, investments in agribusinesses with strong operational footprints are becoming increasingly valuable strategic assets. Transactions of this scale are expected to set the tone for future investments, where financial gains intersect with strategic food security objectives.