Olam reorganizes into food, agriculture divisions
Reorganization could allow potential carve-outs, IPO listings.
Global food and agri-business Olam International has reorganized its business portfolio into two divisions with the goal of maximizing the company’s long-term value and positioning itself for future growth.
Olam Food Ingredients (OFI) offers sustainable, natural, value-added food products and ingredients so that consumers can enjoy the healthy and indulgent products they love. It consists of Olam’s businesses of Cocoa, Coffee, Edible Nuts, Spices and Dairy. OFI has built a global value chain including its own farms, farm-gate origination and manufacturing facilities. OFI partners with customers, leveraging its complementary and differentiated portfolio of “on-trend” food products to co-create solutions that anticipate and meet changing consumer preferences as demand increases for healthier food that is traceable and sustainable.
Olam Global Agri (OGA) is a leading player in high-growth Asian and African countries supplying food, feed and fiber to meet rising demand and a shift to protein-based diets. This group includes the differentiated businesses of Grains and Animal Feed, Edible Oils, Rice, Cotton and Commodity Financial Services.
OGA has built proprietary operating capabilities including significant strengths in global origination, processing, trading, logistics, distribution, farming and risk management and a deep understanding of the market via on-the-ground presence in these emerging markets for more than 30 years.
This plan will enable Olam to explore options including potential carve-outs and IPO listing for OFI and OGA.
Olam International (OIL), as the parent company of OFI and OGA, will play a key role in unlocking the full value of the Olam Group by providing stewardship to the new operating groups and accelerating growth:
As an accelerator, Olam will nurture gestating businesses to full potential, including Packaged Foods, Infrastructure & Logistics and Olam Palm Gabon, as well as incubate new engines for future growth. In addition, it will manage the responsible divestment of non-core assets and businesses identified in the Strategic Plan and redeploy capital for further growth.
A Shekhar has been appointed as the CEO of OFI and will therefore step down from his current role as group chief operating officer of Olam. Sunny Verghese will remain as CEO of OGA and Olam International, in addition to continuing as group CEO.
“Over the past 30 years, Olam has built a valuable portfolio of businesses that have achieved leadership positions,” Verghese said. “By simplifying our businesses across two distinct and coherent groups, each with a clear vision for profitable growth, it sharpens our focus and provides opportunities to capitalise on key market trends, while continuing to leverage the benefits of the Olam Group.
“We believe this will enable us to explore potential carve outs and IPOs in a sequential manner and attract additional investors who are aligned with the vision of these two new groups in order to maximise the value of our business.”
Lim Ah Doo, chairman of the Board, added: “The Board of Directors, building in part on the recommendation from the two independent financial advisors, believes that the reorganization will enable each operating group to pursue its own vision, take advantage of new market opportunities, optimise resources and attract new talent. The Board has every confidence that this significant step forward will allow the Company to strengthen and capitalise on its strong foundation to achieve higher growth and value creation, which we believe will be welcomed by our stakeholders.”
As the reorganization progresses, the company will provide periodic updates to stakeholders on the process and related developments, including changes in operational and financial reporting in line with the new structure.