The unprecedented spree of deals among crop trading giants
gained another leg as Temasek bid for Olam International, in a deal billed as
supporting the agriculture giant's growth, but which would protect the group
for Singapore too .
Temasek, Singapore's state investment agency, said that two
of its divisions, Breedens and Aranda Investments, had joined with shareholders
from Olam's founding family and executive committee to bid $2.1bn in cash for the
47.5% of shares in group that they do not already own.
The deal - priced at Sing$2.23 per share, an 11.8% premium
over their closing prices on Monday - "will give Olam "a stronger long term
shareholder base to support the company's strategy and growth plans over the
medium to long term", the bidding consortium said.
"Members of our consortium are all long-term shareholders of
Olam," Breedens director David Heng said.
"We have invested in Olam over the years, and share a common
investment philosophy to invest and build for the long term."
The company - one of the bigger Singapore-based companies,
valued at Sing$5.3bn ($4.2bn) by Friday's offer – is still recovering from an
attack in 2012 by short-selling fund Muddy Waters, which warned over Olam's
debt levels, prompting the group to call time on an acquisition spree and focus
on reducing its gearing and simplifying its business.
However, the offer also comes amid a spree of deals among
agricultural commodity investors which has reached Singapore, with Noble said
to be in talks to inject its crop trading division into a joint venture with Cofco,
the Chinese state-owned grain and food giant.
That news came less than a week after Cofco bought control
of Nidera, the Dutch-based grain trader, while also last month, on a small
scale, Japan's Sumitomo Corp bought Australian crop handler Emerald.
Last year, Archer Daniels Midland failed in a $3.1bn bid for
Australia's GrainCorp, while Marubeni closed its $2.6bn acquisition of the agriculture
operations of US-based Gavilon, months after Switzerland's Glencore completed
the $61.bn purchase of Canada's Viterra.
'Chinese are on the
Indeed, one banker Agrimoney.com spoke to, who was not
involved in the Olam deal, proposed that the deal may be motivated in part by a
wish by Singapore to keep a grip on a sector which is a big industry for the
"The Chinese are on the march. One would hardly be surprised
if Temasek was supporting a broader strategic aim, besides an investment one,"
the banker said.
All three of the "Now" group of Asian agricultural trading
houses – Noble, Olam and Wilmar International – are currently based in and
listed in Singapore.
Besides Noble's talks with Cofco, Wilmar too has substantial
foreign links, counting Malaysia's Kuok brothers and US-based Archer Daniels
Midland as its leading shareholders.
To remain listed?
Mr Heng said that the bidding consortium would "prefer to
keep Olam as a listed company, which will continue to be guided by its board
and management team.
"However, we will reassess our position if the minimum
public float requirements are not met at the close of the offer," with
Singapore listing rules putting a 10% floor on the percentage of a company that
must be freely floated.
Temasek, whose portfolio was worth Sing$215bn as of March
last year, has a strategy of raising the proportion of its investments in
Olam shares closed up 11.8% at Sing$2.23 in Singapore, at the
offer price, and the highest close since May 2012.