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Olam buys US almond processor and its real estate assets for US$54m

OLAM International will buy Californian almond processor and ingredient manufacturer Hughson Nut Inc (HNI) and its associated real estate assets from APB Partners for a total US$54 million, it said in a bourse filing on Tuesday.

The agri-business firm said HNI's extensive processing capabilities will allow Olam to offer an integrated solution across the almond value chain, complementing similar capabilities in Australia and Vietnam. 

Besides its two primary processing facilities, HNI also manufactures almond ingredients, such as sliced and diced almonds and almond flour in its newly commissioned ingredients processing plant, which also houses steam sterilisation and pasteurisation facilities.

Post acquisition, HNI’s senior executive team and its 400 employees will continue to manage existing operations and grow the ingredients business while benefitting from being a part of Olam's combined business, said the mainboard-listed company.

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The acquisition will be funded by a mix of internal accruals and existing debt facilities, and is expected to be earnings and returns accretive from the first year after consolidation

Subject to customary closing conditions, the transaction is expected to be completed in November 2019.

HNI is backed by three almond grower-family shareholders of APB Partners, who also supply HNI with almonds for processing.

HNI has a strong customer franchise in the US and a growing customer base in the European Union, Japan and Korea that includes branded food manufacturers, retailers and exporters, said Olam.

It said the acquisition is part of its strategy to offer differentiated solutions, such as ingredients and product innovation, and to target new customer segments in co-manufacturing, food service and e-commerce.

Olam’s managing director and CEO of edible nuts, Ashok Krishen, said: "Our ambition is to grow Olam’s almond business into a vertically integrated player with a strong upstream presence in Australia and the US and direct participation in the primary and ingredient processing space that can add value to our customers.

"We see growing demand from consumers for healthy snacks and healthy plant protein – this is driving growth in new product applications and therefore the demand for almond ingredients, particularly in the US."

Olam's shares closed up S$0.01 or 0.5 per cent to S$1.84 on Monday.