Nomura advises Olam shareholders to reject Temasek unit’s offer

SINGAPORE – Japanese financial services group Nomura on Wednesday advised Olam International shareholders to reject Temasek unit Breedens’ takeover offer of S$2.23 a share, saying it believed the commodities firm was worth around S$2.50 a share.

Singapore-listed Olam is one of the world’s biggest traders of coffee, rice and cashew nuts.

The company is worth about S$5.4 billion based on Temasek’s offer price.

“From a long-term perspective, we still see significant value in Olam, as various gestating assets start contributing over the next few years,” Nomura analysts Tanuj Shori and Bineet Banka wrote in a note.

Nomura estimated that Olam’s earnings could grow by more than 20 per cent per annum in the next three years.

It added that Temasek’s emergence as Olam’s majority shareholder was positive for shareholders, as this would help reduce concerns over the firm’s access to funds, which is key in global supply chain businesses.

Temasek’s offer price for Olam -- which works out to about 13.3 times estimated earnings for 2014 -- was not expensive as it was in line with recent transactions in the agriculture business, the Japanese firm added.

Channel NewsAsia