Olam buys sugar mill at US$73.8m, EBITDA accretive in yr 1

By TEO SI JIA


Agricultural company Olam International Limited on Wednesday announced that it has bought 100 per cent of the shares in Hemarus Industries Limited (HIL) of India and its accompanying assets for US$73.8 million.

It will acquire a sugar mill that produces 3,500 tons crush per day and a 20 MW co-generation facility in the purchase.

Olam will be injecting US$6.6 million to bring the sugar mill's capacity to 5,000 TCD, following the transaction.

The sale will be fulfilled in part by US$8 million in cash and US$66 million in debt assumption.

'This acquisition strengthens our position in the Indian sugar industry and is in line with our stated strategic objective of building an annual sugarcane crush capacity of between 2 to 2.5 million tons over the course of the next 5 years,' said Sanjay Sacheti, Olam's India and SAARC regional head.

HIL, which has a book value of US$70 million, is expected to contribute US$90-100 million in turnover and a 32 per cent return in equity.

The acquisition is expected to be Ebitda accretive in its first year and earnings accretive in the next.