Olam: announces strategic partnership with Mitsubishi

Singapore / SG. (oi) Olam International Limited, a leading global agri-business operating from seed to shelf in 65 countries, supplying food and industrial raw materials, announced that it has entered into a subscription agreement with Mitsubishi Corporation (MC), a global integrated business enterprise that develops and operates businesses across a variety of sectors with over 200 offices and subsidiaries in 90 countries worldwide. Subject to the terms and conditions of the Subscription Agreement, the Company proposes to raise additional equity capital by issuing an aggregate of 332.73 million new ordinary shares (the «New Shares») to MC at an issue price of 2.75 SGD per New Share (the «Issue Price») to raise gross proceeds of approximately 915.0 million SGD, with the New Shares representing approximately 12.0 percent of the enlarged issued and paid up share capital (excluding treasury shares) of the Company immediately after completion of the Subscription Agreement.

Temasek Holdings will remain Olam’s majority shareholder with a 51.4 percent controlling stake in the enlarged issued and paid-up share capital (excluding treasury shares) of the Company upon completion of the Subscription Agreement.

The Issue Price of 2.75 SGD per share represents a 29.3 percent premium over the weighted average share price for the twelve months preceding the date of the Subscription Agreement. The Issue Price also exceeds the highest closing price in the preceding one year period before the transaction announcement date. The Issue Price was determined through a competitive bidding process.

MC has informed the Company that in a separate and independent transaction, it will also acquire approximately 222.0 million secondary shares from the Kewalram Chanrai Group, representing approximately 8.0 percent of the enlarged issued and paid-up share capital (excluding treasury shares) of Olam immediately following the issuance of such New Shares. On completion of both these transactions, MC will become Olam’s second largest shareholder with a 20.0 percent shareholding in the Company.

Strategic Rationale

This transaction sets a strong platform for a long term strategic partnership between Olam and MC, with several mutually beneficial potential collaboration opportunities, including the setting up of a proposed Joint Venture in Japan to market specific products of Olam that can leverage MC’s strong distribution and retail presence and Olam’s deep origination expertise in those products.

The partnership is based on a common view held by Olam and MC about the long term attractiveness of the food + agriculture sector. Both Olam and MC have a strategy of selectively integrating across the value chain in order to generate attractive returns and build long-term intrinsic value. To this end, MC and Olam will also explore potential strategic collaboration opportunities that could cover several of Olam’s key platforms including for example, Grains, Edible Nuts, Cocoa, Coffee, Packaged Foods and Rice.

Olam’s Co-founder, Group Managing Director and CEO, Sunny Verghese said: «I am pleased to welcome Mitsubishi Corporation as a long-term strategic shareholder in Olam. We have been business partners for many years and share a lot of the same goals and beliefs about the future of our sector and the attractive long term prospects that it offers. I am confident that this partnership with Mitsubishi will provide several sources of synergy which will help accelerate Olam’s growth and harness its full potential».

The Group CEO of MC’s Living Essentials Group, Takehiko Kakiuchi said: «Today is a memorable day for the partnership between Olam and Mitsubishi. In addition to raw materials procurement and product manufacturing in the Japanese market, Mitsubishi has been developing a vertically integrated model in distribution and retail. Combining our processing, manufacturing and downstream business experience with Olam’s extensive sustainable raw material supply platforms, we will transform the business into a globally sustainable model, both in qualitative and quantitative terms, while we build a value chain that is closely connected to the needs of customers».

Olam’s Executive Director of Finance and Business Development, A. Shekhar, said: «This transaction is consistent with the objectives of the successful voluntary general offer that was concluded in May 2014 where we sought to change our shareholder profile and attract more long-term shareholders to our register.

«We see Mitsubishi as a strategic investor who is well aligned to our long-term growth strategy. This transaction will allow us to pursue selective value accretive investment opportunities that are presented by the current macro-economic uncertainty and depressed commodity market conditions».

About Olam International Limited

Olam International is a leading agri-business operating across the value chain in 65 countries, supplying various products across 16 platforms to over 13’800 customers worldwide. From a direct sourcing and processing presence in most major producing countries, Olam has built a global leadership position in many of its businesses. Headquartered in Singapore and listed on the SGX-ST on February 11, 2005, Olam currently ranks among the top 50 largest listed companies in Singapore in terms of market capitalisation and is a component stock in the Straits Times Index (STI), S+P Agribusiness Index and the DAXglobal Agribusiness Index. Olam is the only Singapore firm to be named in the 2009, 2010 and 2012 Forbes Asia Fabulous 50, an annual list of 50 big-cap and most profitable firms in the region. It is also the first and only Singapore company to be named in the 2009 lists for the Global Top Companies for Leaders and the Top Companies for Leaders in the Asia Pacific region by Hewitt Associates, the RBL Group and Fortune.

About Mitsubishi Corporation

Mitsubishi Corporation (MC) is a global integrated business enterprise that develops and operates businesses across virtually every industry including industrial finance, energy, metals, machinery, chemicals, living essentials, and environmental business. MC’s current activities are expanding far beyond its traditional trading operations as its diverse business ranges from natural resources development to investment in retail business, infrastructure, financial products and manufacturing of industrial goods. With over 200 offices and subsidiaries in approximately 90 countries worldwide and a network of over 600 group companies, MC employs a multinational workforce of approximately 70’000 people.

About the «Living Essentials Group» of Mitsubishi Corporation

The Living Essentials Group operates businesses in fields including distribution, retail and restaurants, providing consumers with products such as foods, clothing, daily consumer necessities and medical goods. The strength of Living Essentials as a group is that it conducts business operations that take entire industries into consideration, from the upstream sourcing of resources to the downstream retail market. The Living Essentials Group makes a contribution to society by providing products and services that match the needs of consumers through business investments and affiliates in Japan and overseas. In addition, it supports diverse and full lives for consumers and places a strong emphasis on the reliability and safety of the products and services it provides. The Living Essentials Group is organised into four divisions: (a) Global Consumer Business Division; (b) Retail Division; (c) Living Essential Products Division; and (d) Living Essential Resources Division.