Olam: Announced that it has acquired Hemarus Industries sugar milling facility and related assets in India for US$73.8m. Mill has a 3.5k ton crush per day (TCD) capacity, and co will invest a further US$6.6m to raise this to 5k TCD.
Acquisition is in line with Co’s strategic objective of building an annual sugarcane crush capacity of 2.0-2.5m tons over the next 5 yrs, and is expected to be Ebitda accretive from the 1st yr and earnings accretive from the 2nd yr post consolidation. CEO highlights grp is also very keen to invest in the Brazilian sugar industry.
We note that Majority of street has Buy call on Co. with 17 Buys, 3 Holds and 1 Sell and a mean TP of $3.05. Recall that Co. yesterday announced FY11 results which was ahead of consensus and has guidance to achieve Net Profits of US$1b by 2016.
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