ShareJunction - Stock Forum Messages %%%:

Back

First < Newer 1381-1400 of 2907 Older> Last

Latest Forum Topics / Olam Intl

Post Reply

OLAM_OLAM

ytoh1688
Veteran

28-Aug-2015 10:25

ytoh1688 About Contact Quote this Post!

x 0
x 0

Alert Admin

http://www.mitsubishicorp.com/jp/en/pr/archive/2015/html/0000028412.html

The reasons why MC bgt Olam. Letter to their sharholders

Mitsubishi Corporation Acquires Stake in Olam International
Move to Shore up Global Procurement Network for Sustainable Food Products

Mitsubishi Corporation (MC) is pleased to announce an agreement reached with Olam International (Olam or the Company) of Singapore for subscribing to 332.73 million new shares in the Company giving it a 12% stake of the enlarged issued and paid up capital of the Company. It is also pleased to announce that it is acquiring 222.0 million secondary shares from the Kewalram Chanrai Group, who are the original promoters of Olam, which will give it a combined 20% stake of the enlarged issued and paid up capital of the Company, following completion of both these transactions. As MC seeks to accelerate business development globally while contributing to providing a stable supply of resources to consumers around the world, one area of increased focus is agricultural production-related businesses, including farming, trading and processing. In particular, the company has been expanding its global procurement network for raw materials such as coffee, cocoa and edible nuts, which are projected to see a notable increase in global demand in the coming years.

1. About the MC-Olam Business Agreement

Under the agreement, MC will acquire existing Olam shares from the original promoters representing 8% of the enlarged issued capital of Olam, and acquire another 12% of the enlarged issued capital through the allotment of new shares by Olam for a total of 20%, amounting to a value of approximately S$1.53 billion (approx. 130 billion yen). MC will also appoint up to two executives to serve on Olam&rsquo s board. The partners will be working together to expand their global network for procurement of food products with the aim of responding adequately to growing customer concerns about sustainability, specifically as it relates to a wide range of confectioneries and raw materials. The venture will allow the partners to pool Olam&rsquo s production and procurement expertise with MC&rsquo s food manufacturing and sales strengths to develop, on a global basis, a new business platform that ranges from agricultural production, procurement, processing and manufacturing right through to sales. Olam already has a strong raw materials and food processing base in Africa and the partnership will allow MC to expand its presence in a region that carries much future potential as a consumer market.

2. Background

In tandem with economic development, food consumption patterns in developing countries have become increasingly diversified and westernized. In addition to staples such as noodles, bread, rice, meat and fish, the demand for food and beverage products such as coffee, cocoa and edible nuts has also been showing signs of increase. At the same time, consumers in developed countries are increasingly demanding products that are not only of high-quality, but that are also produced sustainably, and address the needs of society and the global environment. In response, large global food brands are increasingly focused on ensuring that they are sourcing sustainable materials¹ . This is also the case in Japan where, for instance, demand is increasing for agricultural products sourced from farms that have been certified by Rain Forest Alliance or similar organizations. This trend is expected to gather momentum in emerging markets as well.

Since its foundation in Nigeria in 1989 as a cashew trader, Olam has seen tremendous expansion, including mergers and acquisitions, to its current scale as a major global agri-business firm dealing in some 44 products in 65 countries worldwide. In terms of market share, Olam holds the top three position, in the global coffee, cocoa and edible nuts markets and has been building its brand as one that prioritizes ensuring a sustainable and traceable value chain in the production, procurement and processing of agricultural products. In Africa, Olam also has a strong foundation in flour milling and packaged foods businesses.

As part of its mission to achieve sustainable growth by contributing to fulfilling consumers&rsquo needs for daily living essentials such as food, clothing and shelter notwithstanding changes in economic environments or business structures, MC has committed to undertaking a diverse range of businesses around the world, including moves to expand its global procurement network, as one of its strategies. MC has developed a vertically integrated model that engages in the food business from raw materials procurement to retail and, while securing demand for processed raw materials, mainly for staple foods, has steadily been making progress in the expansion of its global procurement network.

In its business operations, Olam prioritizes sustainability and traceability as a major part of its strategy, contributing to the development of the local communities and economies in which it operates while minimizing negative impacts on the environment. MC also places emphasis on generating, not just economic value, but also environmental and social value in line with its strategy to achieve sustainable corporate value. The convergence of the philosophies of both companies lends itself to an even stronger partnership.

MC and Olam have engaged in business for over 20 years and, in 2014, MC&rsquo s acquisition of an 80% share of Olam&rsquo s grains company in Australia and collaboration to manage that joint venture helped to further solidify the partnership. The current investment move is the result of a long-standing strategic partnership in the pursuit of continued growth over the medium to long term.

By joining forces with Olam, therefore, MC will be able to provide a stable supply of sustainable products to customers in Japan and around the world. In Japan, MC and Olam will establish a joint venture to handle coffee, cocoa and edible nuts and will continue to supply customers with sustainably produced processed foods.

*1. Sustainable materials are agricultural products that are produced with due consideration for society and the environment particularly those produced in a way that helps to improve the livelihoods of small farmers and their surrounding communities, improve sanitation and overall working environments, eradicate child labor and makes appropriate use of water and other natural resources.

Reference Information

Mitsubishi Corporation

1. Representative: Ken Kobayashi, President and CEO

2. Headquarters: 2-3-1 Marunouchi, Chiyoda-ku, Tokyo, 100-8086 Japan

3. Established: 1954

4. Main Business:

Mitsubishi Corporation has seven Business Groups which develop operations in the diverse fields of Global Environmental & Infrastructure Industrial Finance, Logistics & Development Energy Metals Machinery Chemicals and Living Essentials. In addition to these Business Groups, MC has also recently established its Business Service Group. Through these business groups, Mitsubishi Corporation serves customers around the world in virtually every industry.

5. No. of Employees: 71,994 (consolidated, as of March 31, 2015)

6. Net Income: 400.6 billion yen (consolidated, as of March 31, 2015)

Olam International Limited

1. Representative: Sunny George Verghese, Co-founder, Group Managing Director and CEO

2. Headquarters: 9 Temasek Boulevard #11-02, Suntec Tower Two, Singapore 038989

3. Established: 1989

4. Main Business:

Production, procurement, processing and trading of agricultural products port management.

5. No. of Employees: Approx. 23,000 (consolidated, as of June 30, 2014)

6. Sales: S$19,772 million (approx. \1.8 trillion) (consolidated, as of December 31, 2014)

7. EBITDA: S$1,107 million (approx. \100.4 billion ) (consolidated, as of December 31, 2014)

8. Net Income: S$630 million (approx. \57.1 billion ) (consolidated, as of December 31, 2014)

9. Background:

Established in Nigeria in 1989, Olam has built its business around the export of cashew, cocoa, coffee, cotton and other agricultural products. Olam currently has a presence in 65 countries and deals in some 44 products, including coffee, cocoa, edible nuts, ranking among the top firms in the business, supplying some 13,800 client companies globally, including big brand name manufacturers and retailers, with agricultural produce along the supply chain, from upstream products to processed raw materials. Olam also has a strong foundation in Africa, doing business in 24 countries on the continent, conducting business in fields not limited to procurement of raw materials, but also in the flour milling and food manufacturing business, and is taking steps towards further growth in Africa, which is considered to have high consumer growth potential.

Olam&rsquo s Business Portfolio

Useful To Me Not Useful To Me

ytoh1688
Veteran

28-Aug-2015 10:16

ytoh1688 About Contact Quote this Post!

x 0
x 0

Alert Admin

It was a competitive bidder exercise...so there were more than one bidders.....

perfect partnership,,,,Japan strong in Indonesian and vietnam particular myanmar....vs Olam Africa

muddy water...water under the bridge now

ytoh1688 ( Date: 28-Aug-2015 10:06) Posted:

http://www.bloomberg.com/news/videos/2015-08-28/olam-ceo-mitsubishi-deal-will-create-opportunities

Useful To Me Not Useful To Me

ytoh1688
Veteran

28-Aug-2015 10:06

ytoh1688 About Contact Quote this Post!

x 0
x 0

Alert Admin

http://www.bloomberg.com/news/videos/2015-08-28/olam-ceo-mitsubishi-deal-will-create-opportunities

Useful To Me Not Useful To Me

ytoh1688
Veteran

28-Aug-2015 10:04

ytoh1688 About Contact Quote this Post!

x 0
x 0

Alert Admin

http://www.bloomberg.com/quote/8058:JP

Mitsubishi Corp went up by 7.45% today....some related to mkt sentiments but mainly because of the the news.

Mkt love this purchase

Useful To Me Not Useful To Me

nqing87
Supreme

28-Aug-2015 10:04

nqing87 About Contact Quote this Post!

x 0
x 0

Alert Admin

yea, if compare the p/e ratio in sg market vs foreign exchanges, we are like undervalue, especially small/mid caps.. have to thanks sgx for not giving confidence in investing sg market.. who will dare to play sg market, when u can anytime get short seller to give negative report to wack down the share price, or suddenly have fraud claims in the company balance sheet.. so what happen to muddy waters? did olam take any legal actions against them or the whole saga just sweep under the carpet?

Qanghoo ( Date: 28-Aug-2015 08:02) Posted:

It just shows that a lot of shares here are trading way below valuation. Compared to america, the pe n pb for many sgx-listed coys are shamefully pitiful. But also note the run up in share px before announcement. Trading on insider info looks a part of mkt practice. Don' t kid ourselves that there are safeguards to ensure a level playing field.

Maller ( Date: 28-Aug-2015 07:37) Posted:

Wow, so share price at least 2.75?

Useful To Me Not Useful To Me

sun233
Elite

28-Aug-2015 09:56

sun233 About Contact Quote this Post!

x 0
x 0

Alert Admin

Fair value 2.50 but with Archer Daniels deal this stock will be higher.

sun233 ( Date: 28-Aug-2015 09:54) Posted:

Ytoh1688. Thanks for post.

Useful To Me Not Useful To Me

sun233
Elite

28-Aug-2015 09:54

sun233 About Contact Quote this Post!

x 0
x 0

Alert Admin

Ytoh1688. Thanks for post.

Useful To Me Not Useful To Me

ytoh1688
Veteran

28-Aug-2015 09:47

ytoh1688 About Contact Quote this Post!

x 0
x 0

Alert Admin

Singapore: Olam International (OLAM SP) HOLD

Price/Tgt: S$1.91/1.95 Mkt Cap: US$3.3b Avg Val: US$0.9m Hi/Lo: S$2.69/1.69

New Strategic Partnership With Mitsubishi Corporation

What&rsquo s New:

o Olam International (OLAM SP) announced a strategic partnership with Mitsubishi Corporation (MC) with the issuance of 332.73m new shares to MC at S$2.75/share to raise S$915m.

o MC will also acquire 222.0m secondary shares from the Kewalram Chanrai Group (KC).

o Post exercise MC will hold 20% stakes in Olam.

On The Transaction:

o S$2.75/share translate into 2015F/2016F PE of 18x/16x and PB of 1.6x/1.4x.

o Share base will be enlarged by 13.6%, and base on our estimation

o 10% earnings dilution

o Neutral to book value

Implication:

o The 50% premium over Wednesday closing price is a show of confidence on Olam to create long term value for MC.

o Potential synergy: new capital for growth (instead of raising debt) and penetration into Japanese market through MC (expansion of clientele base).

o Institutionalize the shareholding structure with reputable and strong strategic shareholders is positive to improve market confidence for better corporate governance and transparency. This should translate into better valuation.

Recommendation/Valuation:

o Recommendation and target price under review pending analyst briefing for more details on this JV.

o Current target price of S$1.95 is pegged to 11.2x 2016F PE, or 1SD below its 5-year mean of 19.2x. At mean PE, the fair value would be S$2.50.

Figure 1: Shareholding Structure: Pre & Post Transactions

Shareholder	Current (m shares)	% stakes	Post (m shares)	% stakes
Temasek	1,425.14	58.39	1,425.14	51.39
KC Group	355.6	14.56	133.5	4.81
Management (ExCo)	176.22	7.11	176.22	6.35
Others	483.90	19.83	483.90	17.45
MC	-	-	554.69	20.00
Total	2,440.72	100.00	2,773.45	100.00

Useful To Me Not Useful To Me

sun233
Elite

28-Aug-2015 09:40

sun233 About Contact Quote this Post!

x 0
x 0

Alert Admin

Agree no chance to take it private now but don' t forget the largest deal is coming from Archer Daniels. That will add more value to stock. Just hope that they conclude the deal fast.

ytoh1688 ( Date: 28-Aug-2015 09:24) Posted:

Think taking in private will not happen

they already pre-agreed on arrangement and holding structure...so they have to honour their words...plus japanese...zero % chance this will happen

big boys and big boys club....KC group is India co...so we have India/Japan/Singapore partnership.....just waiting for Chinese to come in than this will get people' s attention.

Useful To Me Not Useful To Me

ytoh1688
Veteran

28-Aug-2015 09:32

ytoh1688 About Contact Quote this Post!

x 0
x 0

Alert Admin

they can now take over Noble and some of the commodities player where things are very cheap now

Useful To Me Not Useful To Me

hlfoo2010
Master

28-Aug-2015 09:27

hlfoo2010 About Contact Quote this Post!

x 0
x 0

Alert Admin

IF i shift my left pocket $$ to right pocket , does this move increase my S$??????? Then you keep on shift pocke .

MAD lah ???

Useful To Me Not Useful To Me

ytoh1688
Veteran

28-Aug-2015 09:24

ytoh1688 About Contact Quote this Post!

x 0
x 0

Alert Admin

Useful To Me Not Useful To Me

FATABA
Supreme

28-Aug-2015 09:16

FATABA About Contact Quote this Post! Style: Combined Mood:

x 0
x 0

Alert Admin

Wld not be surprise....MC can continue to scoop up more shares in the market ...below its 2.75 and then with other largest shareholders take it private.
The amount of shares circulating is limited...with Temasek and MC alrdy having over 70%

ytoh1688 ( Date: 28-Aug-2015 09:05) Posted:

at a time when commodities are like toilet paper, MC can pay 2.75. Tells you that its all strategic decision for 10 yrs or 20 yrs

temasek got good vision?

Useful To Me Not Useful To Me

ytoh1688
Veteran

28-Aug-2015 09:16

ytoh1688 About Contact Quote this Post!

x 0
x 0

Alert Admin

analyst all scrambling to give new TP for Olam....but fairvalue seem to be 2.50 at the moment

Useful To Me Not Useful To Me

ytoh1688
Veteran

28-Aug-2015 09:05

ytoh1688 About Contact Quote this Post!

x 0
x 0

Alert Admin

at a time when commodities are like toilet paper, MC can pay 2.75. Tells you that its all strategic decision for 10 yrs or 20 yrs

temasek got good vision?

Useful To Me Not Useful To Me

sun233
Elite

28-Aug-2015 08:39

sun233 About Contact Quote this Post!

x 0
x 0

Alert Admin

Good point. Happy Investing.

FATABA ( Date: 28-Aug-2015 08:30) Posted:

One more point ...the large cash ( 900m if I am not wrong will up OLAM cash flow ) and will inprove the whole financial of OLam.
IF MC pays 2.75 ...what do you think the Jpanese think OLAM is worth ?
In the next few Q , the result will tell and the stock price will tell. :))

sun233 ( Date: 28-Aug-2015 08:23) Posted:

That said the value is very very good. Key point................ don' t sell. See it grow. The deal is going to be completed very soon as early as end Sept. After that earnings will propel this further. I was a bit puzzled when they paid out dividends earlier this year as compared to previous years and was a little worried when they paid much less than last year but am not worried anymore. I won' t say Happy trading for this stock but Happpy Investing. Cheers.

Useful To Me Not Useful To Me

Heero78
Veteran

28-Aug-2015 08:31

Heero78 About Contact Quote this Post!

x 0
x 0

Alert Admin

Shortlist die hard liao

Useful To Me Not Useful To Me

FATABA
Supreme

28-Aug-2015 08:30

FATABA About Contact Quote this Post! Style: Combined Mood:

x 0
x 0

Alert Admin

sun233 ( Date: 28-Aug-2015 08:23) Posted:

sun233 ( Date: 28-Aug-2015 08:17) Posted:

I don' t think so but friend this stock should be in your core portfolio. Something you don' t sell unless the world stops eating. LOL

Useful To Me Not Useful To Me

niteowl68
Elite

28-Aug-2015 08:27

niteowl68 About Contact Quote this Post!
Yells: "God Bleess You"

x 0
x 0

Alert Admin

IMAGINED OPENING BID 2.75.. HUAT 88 !

Useful To Me Not Useful To Me

sun233
Elite

28-Aug-2015 08:23

sun233 About Contact Quote this Post!

x 0
x 0

Alert Admin

sun233 ( Date: 28-Aug-2015 08:17) Posted:

I don' t think so but friend this stock should be in your core portfolio. Something you don' t sell unless the world stops eating. LOL

Maller ( Date: 28-Aug-2015 07:37) Posted:

Wow, so share price at least 2.75?

Useful To Me Not Useful To Me

First < Newer 1381-1400 of 2907 Older> Last

ShareJunction Version: 27 Nov 2020 ver- All Rights Reserved. Copyright ShareJunction Pte. Ltd. Disclaimer: All prices from are delayed. ShareJunction does not provide you with any financial advice. We are not into the business of providing any investment advice. See our Terms and Conditions and Privacy Policy of using this website. Data is delayed for varying periods of time depending on the exchange, but for at least 15 minutes. Copyright © SIX Financial Information Ltd. and its licensors. All Rights reserved. Further distribution and use by third parties prohibited. SIX Financial Information and its licensors make no warranty for information displayed and accept no liability for data and prices. SIX Financial Information reserves the right to adapt and/or alter this website at any time without prior notice.

Web design by FoundationFlux. Hosted with Signetique Cloud.

Mitsubishi Corporation Acquires Stake in Olam International Move to Shore up Global Procurement Network for Sustainable Food Products

Mitsubishi Corporation Acquires Stake in Olam International
Move to Shore up Global Procurement Network for Sustainable Food Products