Olam Allocates $500 Million to Food Ingredients, Plans Gradual Divestment of Other Businesses
Olam Group has today (14 April 2025) revealed further details of its updated business reorganisation plan, including plans to invest $500m into its food ingredients business and divest all its other assets over time.
The agri-food giant announced the reorganisation of its business portfolio into three distinct operating groups in January 2020 – Ofi (Olam Food Ingredients), Olam Agri and the remaining Olam Group.
This aimed to maximise and unlock the group’s underlying shareholder value via potential carve-outs, capital raising options and asset divestments. The separation and carve-outs of the three entities was completed in January 2022.
Following its recently announced proposed sale of the remaining 64.57% stake in Olam Agri to Saudi Agricultural & Livestock Investment Company on 24 February 2025, Olam has today revealed three further key objectives as part of its restructuring efforts.
One key objective is the investment of $500 million of equity into its Ofi division, supporting various continued strategic initiatives to unlock the food ingredients business’ full potential value. This may include exploring a concurrent listing in Europe and in Singapore ‘at an appropriate time’.
The company said it will ‘responsibly divest and monetise’ all of the remaining Olam Group’s assets and businesses over time. It plans to progressively distribute the net proceeds to shareholders via special dividens.
Olam also revealed it will allocate approximately $2 billion to de-lever its balance sheet and make its remaining businesses debt-free and self-sustaining.
According to coherent market insights, the speciality food ingredients industry is anticipated to expand at a CAGR of 5.6% throughout the forecasting period of 2025-2032. The market is anticipated to be worth USD 113.43 Bn in 2025 and is anticipated to grow to USD 166.21 Bn by 2032. The size of the industry is being led by increasing demand for taste and texture.
The company emphasised that these plans, including the timing of their implementation, may change depending on market conditions and opportunities. They are subject to the receipt of regulatory and shareholder approvals where required.
This updated regorganisation plan is expected to be financed from two main sources of funds: global cash proceeds estimated at $2.58 billion from the sale of 64.57% stake in Olam Agri, and net sale proceeds from the divestment of assets and businesses in the remaining Olam Group.
Additionally, the group will re-initiate share buybacks under the existing share buyback mandate, with shareholders’ approval to be sought for the renewal of its mandate at the upcoming annual general meeting.
Olam noted that Ofi has navigated various external challenges since its formation in 2020, including the Covid-19 pandemic, the Russia/Ukraine conflict and volatile commodity prices. Despite this, the business has continued to deliver on its medium-term earnings guidance of high single-digit adjusted EBIT growth.
Olam Group has been investing behind its planned strategy via a combination of organic and in-organic investments, almost entirely focused on its Ingredients & Solutions segment. This underscores the group’s ambitions to become a more value-added food and beverage ingredients company.
Source:
Ecommerce PLatform: FOODBEV MEDIA Ltd.
Company: Olam
