Home News Olam Closes the Divestment of Indonesian Unit to Mitr Phol Sugar

Olam Closes the Divestment of Indonesian Unit to Mitr Phol Sugar

Olam International, has closed the sales of 50 percent stake in its Indonesian sugar joint venture, Far East Agri, said the company yesterday (03/25) - Photo by Bangkok Post

JAKARTA (TheInsiderStories) – Olam International, has closed the sales of 50 percent stake in its Indonesian sugar joint venture, Far East Agri Pte., Ltd., said the company yesterday (03/25). The Singapore’ food and agribusiness company, sold the shares to its partner partner Mitr Phol Sugar Corp., for US$82.5 million.

The transaction is expected to be completed by end-March 2020, subject to customary closing conditions. In 2017, the Thailand firm invested $100 million to take up a 50 percent stake in the Indonesian unit.

Then, the two companies entered a sales agreement with an initial total consideration up to $85 million. With the completion of the sale, Far East Agri will cease to be an associated company of Olam.

Far East Agri operates a sugar refinery in Indonesia through PT Dharmapala Usaha Sukses in Cilacap, Central Java. The producer acquired 100 percent shares of Dharmapala on Oct. 7, 2007 through direct wholly-owned subsidiary of the company.

Under the new agreement, the planters will explore the development of a green-field sugar milling facility in East Java. Upon completion in 2020, the sugar mill will source 1.2 million metric tons of cane from farmers.

Indonesia is predicted to continue importing sugar because of the ongoing revitalization of sugar factories run by state-owned sugar company. The revitalization process of several factories had been completed, but they could only produce 50 percent of their capacity because the country’ sugarcane farms were still in the process of expansion

Its estimated that after the state-owned company had been revitalized, national sugar production would reach up to 3.2 million tons by 2019, which would meet domestic consumption of 235,000 tons per month. Last year the deficit was estimating could reach 500,000 tons. 

Mitr Phol is the world’ fourth largest and Asia’s largest sugar producer with 16 sugar mills, eight power plants and four ethanol distilleries, contracting 143,000 farmers across Thailand, Laos, China and Australia. It is also Asia’ largest bio-energy producer and has business interests in wood substitute materials, fertilizers and agriculture-related logistics.

While Olam operating across the value chain in 70 countries, supplying various products across 18 platforms to 23,000 customers worldwide. The group had previously said that the sale is in line with its six-year strategic plan announced in 2019 with a focus on businesses with sustainable growth potential, and divesting and/or restructuring de-prioritized assets and businesses.

Written by Staff Writter, Email: theinsiderstories@gmail.com