Monday, December 24, 2012
Olam is down 0.6% to $1.545 in sluggish trade after the commodity-trader acquired Seda Solubles' coffee business for US$52m. This is Olam's second acquisition since it came under attack by short seller Muddy Waters last month for its “acquisition binge." Market watchers observe that Olam do not seem to have taken their foot off the gas and the purchase may be intentionally meant to be a signal that things are as per normal. In any case, this is a relatively small deal and may have been in the works. A separate announcement that the group has given up on a proposed sugar-mill acquisition in Brazil is just confirmation of a previously canceled deal as the parties could not agree on a price. But while management insists that the group is not in need of capital, questions are being raised why Olam is doing a relatively expensive capital raising. The rights issue closes on Dec 27, leaving just 2 more trading sessions for players to to participate. Nevertheless, the psot Muddy Waters situation appears to be stabilizing with share price has been bolstered by series of Temasek puchases, upping its stake to 18.0% from 16.3% last week.