Olam

Olam: Nomura advises shareholders to reject the takeover offer of S$2.23 a share, citing that the commodities firm was worth ~$2.50/share. House still see significant value in Olam, as various gestating assets start contributing over the next few years. House believes that even if Olam’s board approves the offer, Temasek would end up owning ~50-60% stake in Olam, at best. To take Olam private (which is not Temasek’s stated intent), it would need to offer a higher premium. While the offer values Olam at 14x FY14 P/E (~10% premium to peers Wilmar and Noble) and 9x FY14 EV/EBITDA, it is in line with the recent major transactions in the global agri space.