Further to the awarding of the bid to acquire one of two flour milling companies offered for privatization by the National Centre for Privatization (NCP) and the Saudi Grains Organisation (SAGO) in May, Olam says it has completed the acquisition of its 10% stake for SAR 49.5 million ($18.0 million) on Dec 1.
See: Olam International awarded joint bid to acquire one of Saudi flour mills offered for privatisation
The acquisition was made through the consortium comprising National Agricultural Development Company (NADEC), Al Rajhi International for Investment Company, Ajlan & Bros and Olam International.
As a member of the consortium, Olam will participate as the technical partner with a minority stake of 10% in the joint venture company (JVCo), Food Security Holding Company. The remaining 90% will be owned by the rest of the consortium.
Leveraging on its extensive experience in owning and operating flour mills in West Africa, Olam will oversee the management of plants and operations.
With the completion of the acquisition, the JVCo owns manufacturing plants in three locations – Riyadh, Hail and Jazan – with a combined wheat milling capacity of 1.3 million metric tonnes and feed milling capacity of 180,000 metric tonnes, which service growing domestic demand.
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“This investment supports our strategy to expand our wheat milling footprint in key markets across Africa and the Middle East. Over the past decade, Olam has built a world-class wheat milling business and established itself as a leading miller in Africa,” says Saurabh Mehra, president of Olam’s wheat milling business.
“This acquisition is part of our entry strategy into the Kingdom of Saudi Arabia. The JV will allow us to leverage our best-in-class technical expertise while gaining valuable insight into doing business in the country,” he adds.
Shares in Olam closed at $1.73 on Dec 1.
