Olam breaks free from Temasek-owned company offer

It will still be listed on SGX.

All eyes are on Olam now as the cash offer by Temasek-owned Breedens Investment has closed 4 days ago, with the former walking away with 80.4% of shares.

According to OCBC, the S$2.23/share cash offer for Olam International by a consortium led by Breedens Investment – a Temasek-owned unit – has closed on 23 May, with the group collectively owning 80.4% of all issued shares (71.9% of fully diluted share capital).

Here's more from OCBC:

As the free-float of the company remains well above the 10% threshold, Olam will continue to be listed on SGX.

Separately, Olam posted a slightly mixed set of 9MFY14 results recently. Revenue was down 5% at US$13,664.1m and met about 59% of our full-year forecast; this mainly dragged down by lower volumes in its Industrial Raw Materials segment.

Nevertheless, modest margin improvements and one-off gains (S$271.0m from reclassification of an asset) saw reported net profit jumped 89% to S$576.7m. Excluding one-off items, operational PATMI dropped 8% to S$277m, which still met 70% of our FY14 estimate.

Olam continues to execute on its strategic plan (with focus on extracting value from existing operations and investments, and not pursuing volume growth), and has completed nine of the 12 strategic initiatives it had announced in Apr 2013.

The other three initiatives, which are expected to be completed in FY14, are likely to release S$154.6m of additional cash, generate a P/L gain of S$22.8m. Olam has also moderated the pace of new investments and incurred a 33% lower capex of S$502.0m in 9MFY14. However, FCFF remains an outflow of S$707.1m (versus –S$861.7m in 9MFY13); and it aims to be FCFF positive by end FY14.

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