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Update: Olam to plan sale of more than 10% stake to Mitsubishi Corp
[SINGAPORE] Olam International Ltd., the food commodity trader controlled by Singapore's state investment company, plans to sell a stake of more than 10 per cent to Mitsubishi Corp, people with knowledge of the matter said.
The deal will involve Olam issuing new shares to Mitsubishi, said the people, who asked not to be identified as the information is private. Temasek Holdings has a 58 per cent stake in Olam and will remain the largest shareholder, the people said.
The Olam-Mitsubishi deal is the latest sign of a growing interest by Asian trading houses to expand in agriculture.
An external representative for Olam declined to comment. Mitsubishi didn't answer a phone call to its office seeking comment outside normal business hours.
Olam spent two years adjusting its assets, selling stakes in its Australian grain and packaged food businesses, while expanding in cocoa. Already one of the top three traders globally in coffee and rice, Olam agreed to pay a company record US$1.3 billion to Archer-Daniels-Midland Co for its cocoa business, a move that would elevate it into the top-three processors.
Olam's shares have dropped 26 per cent in the past year, more than double the 12 per cent slide in Singapore's benchmark Straits Times Index. It surged 13 per cent before halting its shares on Thursday for the biggest gain since April 2009.
Singapore's Temasek took a controlling stake in Olam in March 2014 to help the trading company fend off attacks from US short-seller Muddy Waters LLC. The US company led by Carson Block in 2012 questioned the state of Olam's finances and operations, causing the stock to plummet.
Little known to retail consumers, Olam supplies materials to companies including PepsiCo Inc. One in eight chocolate bars eaten globally is made from beans handled by Olam, while the trader produces enough cotton to provide all the world with three pairs of socks each year. The quantity of rice it handles annually could feed all of Africa for a week.