Olam

Olam to acquire the dehydrated and vegetable products business of Gilroy Foods & Flavors from ConAgra Foods for US$250m. Gilroy is one of the largest processors of onion, garlic, capsicum and other specialty vegetable products in the US. We view this investment positively, as it is in line with mgt’s strategy to expand the Spices & Dehydrates portfolio, and is expected to be earnings accretive from the first year of consolidation.

Olam’s combined US dehydrated veg operations is expected to generate US$300-350m revenue annually, on EBITDA margin of 14-15%. OCBC has a Buy call with a $3.61 target.