Olam International will sell out it 50% stake in Indonesian sugar producer Far East Agri to its joint venture partner Mitr Phol Sugar for up to $85 million.
The Singaporean food and agri-business company said that its exit from the Indonesian sugar joint venture aligns with its six-year strategic plan, which was announced in January 2019. As per the plan, Olam International wants to focus on businesses that have sustainable growth potential and also on selling and/or restructuring de-prioritized assets and businesses to release capital and redeploy to its core businesses.
As part of the strategy, the Singaporean commodity trader at that time revealed its intentions to offload its sugar, rubber, wood products and fertilizer businesses and other assets to generate $1.6 billion of cash.
The sale of its stake in Far East Agri is expected to close by the end of this month once it meets the customary closing conditions.
Far East Agri was created as a 50:50 joint venture in December 2017 by Olam International and Thai sugar producing giant Mitr Phol Sugar. The sugar joint venture has been expected to capitalize on growth opportunities for sugar milling and refining in Indonesia.
As per the joint venture terms, Mitr Phol Sugar invested $100 million to acquire a 50% stake in Far East Agri, which has been operating the Dharmapala Usaha Sukses sugar refinery in Cilacap, Indonesia.