Temasek-led group offers $2.1 billion for remaining Olam shares
By Rachel Armstrong and Michael Flaherty
SINGAPORE/HONG KONG (Reuters) - A Temasek-led shareholders group has offered to pay $2.1 billion in cash for shares in Olam International Ltd (OLAM.SI: Quote) they don't already own, putting the heft of the Singaporean state investor behind the commodity trading firm's weak balance sheet.
The proposal comes after a tumultuous stretch for Olam, one of the world's leading traders in rice, coffee and cocoa, that saw it come under attack from short-seller Muddy Waters in late 2012 for its accounting practices.
Olam denied the short-seller's claims, gained financial support from Temasek TEM.UL and drew up a plan to cut capital spending and debt. Its stock surged some 40 percent since late January prior to the offer announcement.
A deal would also be in keeping with Temasek's TEM.UL recent pattern of increasing the unlisted portion of its $170 billion portfolio of companies.
A Temasek unit, Breedens Investments, is leading a consortium that includes Aranda Investments and members of Olam's executive committee, which collectively own 52.5 percent of the commodities trader.
The offer price of S$2.23 per share represents an 11.8 percent premium over Olam's last traded price and values the company at $4.3 billion. The deal also includes an offer to buy outstanding convertible bonds and warrants. Olam's shares rose to S$2.21 after the announcement.
"A takeover will put Temasek's AAA rating squarely behind Olam and hopefully allow them to repair their weak financials." said Michael Dee, a former senior managing director at Temasek Holdings.
Dee noted that Olam continues to be over-leveraged and that last year's rights offering to Temasek and others had only added more debt and interest expenses. Continued...