Olam Sheds Stake in Sugar Joint Venture

March 3, 2020

4 Min Read
Olam Sheds Stake in Sugar Joint Venture
Olam is selling its equity stake in Far East Agri, a sugar joint venture in Indonesia. Image courtesy of Pixabay

Agribusiness and food firm Olam International announced this week that an agreement was formed to shed its 50% equity stake in the Indonesian sugar joint venture Far East Agri to its partner Mitr Phol Sugar Corporation. The buyer will pay Olam between $82.5 million and $85 million after final adjustments are made. 

“Olam’s sale of it shareholding in the sugar joint venture is in line with its six-year strategic plan announced in 2019, focusing on businesses with sustainable growth potential and divesting and/or restructuring de-prioritized assets and businesses to release capital and redeploy the prioritized businesses,” the company said in a press release published Tuesday. 

The companies anticipate that the deal will reach completion by the end of this month. Once the transaction is finished, Far East Agri will no longer be associated with the agribusiness. Olam said it expects to book a post-tax capital gain of $37.5 million to $40 million when the sale closes.

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In January this year, Olam stated that it is reorganizing its business portfolio with the creation of two operating groups, Olam Food Ingredients (OFI) and Olam Global Agri (OGA), in an effort to create long-term value and take advantage of growth opportunities. OFI includes the firm’s cocoa, coffee, edible nuts, spices, and dairy businesses. The newly formed unit supplies sustainable, natural, value-added food products and ingredients. Serving African and Asian countries, Olam’s OGA group encompasses its grains and animal feed, edible oils, rice, cotton, and commodity financial services businesses.

Based in Singapore, Olam supplies food, ingredients, feed, and fiber to about 20,000 customers across the globe. 

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