japanese corporations make a beeline for singapore businesses 1148822015

Two M&A transactions were reported Thursday between Japanese and Singapore corporations

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By :  ,  Financial Analyst

Japanese corporations suddenly seem to have developed an affinity for Singapore businesses judging from two M&A deals reported Thursday (August 27).

Singapore commodity trader Olam International Ltd (SGX:O32) said in a statement that it will issue 332.73 million new shares to Mitsubishi Corp (TYO:8058) at SG$2.75 per share pursuant to a strategic partnership. The arrangement could ultimately lead to a Japanese JV that would distribute specific Olam products in Japan. Olam is a leading agri-business that supplies food and industrial raw materials across 65 countries.

Following the issue of the shares, Olam will raise SG$915 million as “new growth capital for the company”. It clarified that Temasek, the state investment vehicle, will continue to hold a controlling 51.4 per cent stake post the issue of new shares.

Olam’s Co-founder, Group Managing Director and CEO, Sunny Verghese said: “I am pleased to welcome Mitsubishi Corporation as a long-term strategic shareholder in Olam. We have been business partners for many years and share a lot of the same goals and beliefs about the future of our sector and the attractive long term prospects that it offers.”

“Combining our processing, manufacturing and downstream business experience with Olam’s extensive sustainable raw material supply platforms, we will transform the business into a globally sustainable model, both in qualitative and quantitative terms, while we build a value chain that is closely connected to the needs of customers,” said Takehiko Kakiuchi, Group CEO of Mitsubishi’s Living Essentials Group.

According to Bloomberg, Mitsubishi is simultaneously buying an 8 per cent stake in Olam from Kewalram Chanrai Group, which founded Olam in 1989, for SG$615 million.

After the two deals, Mitsubishi will be the second-largest shareholder in Olam after Temasek.

Meanwhile, Ezra Holdings Limited (SGX:5DN), a Singapore-based offshore marine services provider, said Japanese engineering company CHIYODA CORPORATION (TYO:6366) will invest in EMAS AMC, Ezra’s subsea services business, forming EMAS CHIYODA Subsea – a 50:50 Joint Venture.

“With the establishment of EMAS CHIYODA Subsea, we are in a position to provide comprehensive services to our clients, from early phase concept study to EPCI, throughout the lifecycle of any offshore oil and gas project,” said Shogo Shibuya, President and CEO of Chiyoda. “Chiyoda is excited about this new opportunity and glad that we can jointly work with an excellent subsea player, EMAS AMC.”

Chiyoda will pay SG$150 million to Ezra, as well as pay another SG$30 million to subscribe for shares in the new joint venture company.

The transaction values Ezra’s subsea business at about SG$1.25 billion.

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