Olam is à commodities trading firm
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Temasek Unit Offers to Buy Olam in $4.2 Billion Cash Deal (2) 2014-03-14 03:51:53.450 GMT
(Updates share price in fifth paragraph.)
By Michelle Yun and Jonathan Burgos March 14 (Bloomberg) -- A Temasek Holdings Pte unit offered to buy Olam International Ltd. in a bid that values the commodity trader at S$5.3 billion ($4.2 billion), about 16 months after it helped stave off an attack by short-seller Carson Block. Breedens Investments Pte is offering S$2.23 cash per share, the Singapore-based company said today in a statement, a 12 percent premium to Olam’s last closing price of S$1.995. It’s also making an offer for Olam’s outstanding bonds and warrants. Temasek, Singapore’s state-owned investment firm, became the largest investor in Olam after concerns raised by Block in November 2012 caused the stock to plummet. The bid for Olam, one of the world’s top three coffee and rice traders, highlights growing interest in agricultural investments as rising global populations boost food demand. “Temasek is already a large holder of Olam so they probably know the business better than everybody else,” said Robert Aspin, the Singapore-based head of equity investment strategy at Standard Chartered Plc. “The fact that they are willing to pay a premium is indicative of the value that they see in the underlying business.” Olam gained 11 percent to S$2.21 as of 11:09 a.m. in Singapore as it resumed trading after the stock was halted yesterday. Trading volume on March 12 was 16.2 million shares, or 3.6 times the average daily volume in the previous three months, according to data compiled by Bloomberg.
Group Support
Breedens also has an agreement with a group including Kewalram Singapore Ltd., Olam’s founding family shareholder, and 10 Olam executives including Chief Executive Officer Sunny Verghese to not tender their shares until six months after the offer closes, Breedens said in a statement. All totaled they hold 52.5 percent of Olam stock. Kewalram and three members of key management have agreed to sell a 5.6 percent stake in Olam in acceptance of the offer. Credit Suisse Group AG, DBS Group Holdings Ltd., and United Overseas Bank Ltd. advised Breedens. Olam has rallied 30 percent this year in Singapore through to March 12, compared with a 2.2 percent decline in the benchmark Straits Times Index. The stock is set for its seventh weekly increase amid a rise in farm commodity prices. The S&P GSCI Agricultural Index has advanced 14 percent this year, with price surges in coffee and cocoa.
Keep Listing
Breedens doesn’t plan to make any major changes to Olam’s businesses or terminate employees. It also intends to keep Olam as a listed company, unless the minimum float requirements aren’t met, it said. Olam is a supplier and processor of agricultural products and food ingredients across 16 platforms in 65 countries. “We believe a successful offer will provide Olam with a stronger and more stable shareholder base to support Olam’s strategy and business model for the long term,” Breedens Director David Heng said in the statement. The offer by the Temasek unit comes after Cofco Corp., China’s largest state-owned food company, agreed last month to buy to 51 percent of Dutch grain trader Nidera BV. In a separate deal, Noble Group Ltd., Asia’s biggest commodity trader by sales, is in talks to potentially form a joint venture around its agriculture unit with Cofco.
Block’s Bet
Block said in November 2012 he was betting against Olam because he questioned the trader’s accounting methods and asset purchases, pushing the stock to a more than three-year low in December 2012. Olam rejected the assertions by Block and his research firm Muddy Waters LLC. Block today declined to comment. “Olam has been oversold following the issues raised by Muddy Waters and has bounced back strongly as the company addressed those concerns,” Alan Richardson, a Hong Kong-based money manager at Samsung Asset Management, said by phone before the announcement. As well as adding Olam shares after the Block allegations, Temasek also backed a $750 million bond sale by the commodity trader. Olam said in December 2012 it planned to sell bonds and warrants to address any “lingering doubts” about its finances. The investment firm agreed at the time to buy any rights not taken up by other investors. Temasek holds 24.6 percent of Olam through its units Breedens and Aranda Investments Pte, and the founding family has a 20.2 percent stake, according to today’s statement.
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--With assistance from Elisabeth Behrmann in Sydney, Nikolaj Gammeltoft in New York and Klaus Wille in Singapore.
To contact the reporters on this story: Michelle Yun in Hong Kong at +852-2977-4643 or myun11@bloomberg.net; Jonathan Burgos in Singapore at +65-6212-1156 or jburgos4@bloomberg.net To contact the editors responsible for this story: Jason Rogers at +65-6231-3673 or jrogers73@bloomberg.net Andrew Hobbs at +61-2-9777-8642 or ahobbs4@bloomberg.net Madelene Pearson, Iain Wilson