Group acquiring the assets from De Francesco and Sons
By EMILYN YAP 20 December 2008
Agriculture supply chain manager Olam International is buying a US vegetable dehydration facility.
It made no mention of the purchase price in its announcement yesterday but told BT that the acquisition cost is ‘not significant’ and is a ‘high single digit’ in millions. Olam also said that it will fund the acquisition with internal accruals and a three-year term loan - resources which its announcement said are already in place.
The company had said last month that it will hold back on merger and acquisition (M&A) activities until credit markets stabilise and capital availability improves.
‘However, we had indicated that small value M&A such as these will continue to be pursued as we will be able to finance such investments,’ the group told BT. ‘This asset acquisition helps us jump-start our entry into dehydrates business within the US.’
With the deal, Olam will add US onions, garlic and other vegetable dehydrates to its existing portfolio of spices and dehydrates from China, Vietnam and India.
Olam is acquiring the assets in California from De Francesco and Sons and related parties. It will also incur minor capital expenditure to refurbish and balance the processing line.
The dehydration plant, which has been around from 1968 till its closure in February 2006, will be fully operational in 2009/2010. Olam will be able to participate in the next crop season and the investment will be earnings-accretive from FY2010 onwards.
Olam had also acquired US garlic, onion and vegetable ingredient maker Key Foods Ingredients (KFI) last year. ‘Through acquisition of the De Francesco assets, we see significant potential to build on the KFI franchise and extract substantial synergies in sales and marketing, quality assurance, distribution, logistics and warehousing,’ said Olam’s managing director and group product head for spices & dehydrates, Ashok Krishen.
Olam also plans to set up a seed breeding programme and a comprehensive grower programme to support raw material requirements for the plant’s intended capacity.
Shares in Olam eased one cent to close at $1.16 yesterday.
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Olam Buying US Vegetable Dehydration Facility
Group acquiring the assets from De Francesco and Sons
By EMILYN YAP
20 December 2008
Agriculture supply chain manager Olam International is buying a US vegetable dehydration facility.
It made no mention of the purchase price in its announcement yesterday but told BT that the acquisition cost is ‘not significant’ and is a ‘high single digit’ in millions. Olam also said that it will fund the acquisition with internal accruals and a three-year term loan - resources which its announcement said are already in place.
The company had said last month that it will hold back on merger and acquisition (M&A) activities until credit markets stabilise and capital availability improves.
‘However, we had indicated that small value M&A such as these will continue to be pursued as we will be able to finance such investments,’ the group told BT. ‘This asset acquisition helps us jump-start our entry into dehydrates business within the US.’
With the deal, Olam will add US onions, garlic and other vegetable dehydrates to its existing portfolio of spices and dehydrates from China, Vietnam and India.
Olam is acquiring the assets in California from De Francesco and Sons and related parties. It will also incur minor capital expenditure to refurbish and balance the processing line.
The dehydration plant, which has been around from 1968 till its closure in February 2006, will be fully operational in 2009/2010. Olam will be able to participate in the next crop season and the investment will be earnings-accretive from FY2010 onwards.
Olam had also acquired US garlic, onion and vegetable ingredient maker Key Foods Ingredients (KFI) last year. ‘Through acquisition of the De Francesco assets, we see significant potential to build on the KFI franchise and extract substantial synergies in sales and marketing, quality assurance, distribution, logistics and warehousing,’ said Olam’s managing director and group product head for spices & dehydrates, Ashok Krishen.
Olam also plans to set up a seed breeding programme and a comprehensive grower programme to support raw material requirements for the plant’s intended capacity.
Shares in Olam eased one cent to close at $1.16 yesterday.
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