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Olam International Ltd. (OLAM), one of the world’s top three suppliers of rice, cocoa, and coffee, agreed to invest $240 million in its first sugar mill in Brazil by buying Usina Açucareira Passos S.A.
The Singapore-based company will pay 255 million reais ($128.6 million) for the acquisition and will invest $111.5 million over the next five years to expand capacity and boost output, Olam said in a statement today. The investment will be funded internally and with borrowings, it said.
Olam, partly owned by Singapore’s state-backed Temasek Holdings Pte., is buying assets and developing new projects to help boost annual profit after tax to $1 billion by 2016, Chief Executive Officer Sunny Verghese said March 7 in Kuala Lumpur. The company this year also bought a biscuit and candy maker in Nigeria and agreed to invest as much as $800 million with a partner in a new dairy venture in Russia.
“Brazil is the largest and one of the most cost competitive producers of sugar in the world, and is integral to executing our sugar strategy,” Devashish Chaubey, Olam’s president for sugar, said in the statement.
The mill’s capacity will expand to 3 million metric tons annually from 1.75 million tons, it said. The sugar mill is located in the state of Minas Gerais, the second largest sugarcane growing area in Brazil, it said.
Olam closed 1.8 percent higher at S$1.695 in Singapore, before the announcement today.
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