Olam Group Limited · SGX:VC2
Olam — Merger or Acquisition (July 2008)
27 slides from Olam's merger presentation, Jul 2, 2008
Slide 1: Formation of 50:50 Joint Venture for Investment in PureCircle
Formation of 50:50 Joint Venture for Investment in PureCircle Analysts/Media Conference Call 2 July 2008 Singapore 1
Slide 2: Forward looking statements
Forward looking statements This presentation may contain statements regarding the business of Wilmar International (‘Wilmar’) and its subsidiaries (‘Wilmar Group’) and Olam International Limited (‘Olam’) and its subsidiaries (‘Olam Group’) that are of a forward looking nature and are therefore based
Slide 3: Presentation Outline
Presentation Outline Transaction Overview About PureCircle Transaction Rationale Summary Q&A 3
Slide 4: Presentation Outline
Presentation Outline Transaction Overview About PureCircle Transaction Rationale Summary Q&A 4
Slide 5: Transaction Overview
Transaction Overview Deal 50:50 Olam-Wilmar JV (known as Olam Wilmar Description Investment Holdings or “OWIH”) to invest in: 20% strategic stake in PureCircle Limited, consisting of 26.54m shares at £2.01 (US$4.00) per share Total aggregate investment value of US$106.2m Becomes single largest share
Slide 6: Transaction Overview
Transaction Overview £2.01 (US$4.00) per share represents a premium of Price 0.5% over the last traded price of £2.00 (US$3.98) as Consideration of 30 June 2008. Acquisition to be funded through borrowings and Financing internal accruals Terms and OWIH to be represented by 1 board seat on PureCircle
Slide 7: Presentation Outline
Presentation Outline Transaction Overview About PureCircle Transaction Rationale Summary Q&A 7
Slide 8: About PureCircle
About PureCircle Listed on the AIM market in London since Dec 2007 with a market capitalisation of US$530 million Started in 2002 as a stevia biotechnology company to commercialise research, PureCircle is now a world leading commercial supplier of natural, high-intensity sweeteners with products of
Slide 9: Financial Performance
Financial Performance US$m 2005A 2006A 2007A 2008F 2009F Total 23.3 30.0 106.7 174.3 291.7 Assets Revenues 1.3 4.4 21.8 65.5 243.3 NPAT (3.7) (3.1) 4.6 23.7 131.3 Note: 2008F and 2009F (year ending Dec) estimates are based on market consensus. 9
Slide 10: Product Lines and Customers
Product Lines and Customers PureCircle has 3 products: Rebaudioside-A (Reb-A), a natural high-intensity sweetener with 97% purity, zero-calorie, 200X sweeter than sugar and stable at high temperatures, making it suitable for cooking, freezing, baking, etc SWETA, 150X sweeter than sugar and is used f
Slide 11: Integrated Supply Chain
Integrated Supply Chain Independent Ganzhou Julong PureCircle Chinese farmers (China) Malaysia (80% of world’s 95% Capacity: 1,000MT 100% stevias are grown Capacity: 1,000MT each of Reb-A and in China) of crude extracts p.a. SWETA p.a. Extraction rate: 10% Out-turn: 30% Plantation/ Blending/ Sale to
Slide 12: Industry Overview
Industry Overview Global high-intensity sweetener (HIS) market estimated at US$1.3b and growing at 4% p.a. Major consumers are US and Europe: Other Latin 7% America 9% North America Asia Pacific 44% 19% Europe 21% 12
Slide 13: Industry Overview (cont’d)
Industry Overview (cont’d) HIS market dominated by artificial sweeteners only because stevia- based sweeteners have yet to be accepted for use as a food ingredient in US and Europe Artificial sweeteners face the threat of being substituted by natural sweeteners as consumers seek healthier choices Ap
Slide 14: First-mover Advantage
First-mover Advantage PureCircle is now the only major supplier of high purity Reb-A of up to 97% compared to other suppliers which produce Reb-A at lower purity levels PureCircle holds patents for processing stevia extracts into Reb-A High purity levels are necessary for products with minimum formu
Slide 15: Expansion and Growth Plans
Expansion and Growth Plans Treble extraction capacity in China and double refining capacity in Malaysia over the next few years Set up plantations, an extraction plant and a refinery in Kenya with James Finlay of London; investments announced being: US$15m for crude stevia extraction US$5m for plant
Slide 16: Combined Strengths of Olam and Wilmar Will Be Catalyst for PureCircle
Combined Strengths of Olam and Wilmar Will Be Catalyst for PureCircle Access to confectionery, F&B manufacturers in more than 60 end- markets given Olam’s leadership positions in supplying cocoa, coffee, dairy products and sugar ingredient manufacturing capabilities Upstream plantation development a
Slide 17: Presentation Outline
Presentation Outline Transaction Overview About PureCircle Transaction Rationale Summary Q&A 17
Slide 18: Scope and Roles of OWIH
Scope and Roles of OWIH Determine an optimum plan for the development and efficient management of commercial scale stevia plantations and outgrower programmes in existing and new locations; Assist in the development of efficient commercial scale crude extraction facilities to support the plantation
Slide 19: Critical Success Factors for Natural, High-intensity Stevia-based Sweeteners
Critical Success Factors for Natural, High- intensity Stevia-based Sweeteners Competitive production and sourcing of stevia leaves and to secure reliability of raw material supply Commercialisation of proprietary technology for refining crude extracts into end products of high purity, such as Reb-A,
Slide 20: Significant Growth Opportunity
Significant Growth Opportunity Potential growth for stevia-based sweeteners stimulates high demand for products like Reb-A and SWETA Diet versions of carbonated drinks consumes 20,000 MT of artificial sweeteners annually, mainly Ace-K and aspartame. Reb-A is an emerging alternative to artificial swe
Slide 21: Significant Growth Opportunity
Significant Growth Opportunity Expected shortfall in production of stevia leaves to meet demand for producing stevia-based sweeteners implies high growth potential for companies who can successfully develop a fully integrated supply chain from farm to factory gate OWIH, which combines the upstream p
Slide 22: Diversifying Production Options for Stevia
Diversifying Production Options for Stevia Growth in industrialisation and therefore lack of arable land for agricultural production in China Abundant arable land available in Africa and South America for plantation development compared to Asia Lower land acquisition cost in Africa than Asia Plantat
Slide 23: Diversifying Production Options for Stevia
Diversifying Production Options for Stevia These regions/countries offer round-the-year tropical climate conditions, eg. 13 hours of sunlight per day, which are favourable for stevia production Short gestation period of between 90-120 days provides scope for having possibly 2-3 crops per year Extrac
Slide 24: Investment Consistent with Olam’s and Wilmar’s Growth Strategies
Investment Consistent with Olam’s and Wilmar’s Growth Strategies Consistent with growth strategies in diversifying and entering into new adjacent products and extending global supply chain into attractive, adjacent value chain segments for additional margin capture Both companies believe in building
Slide 25: Presentation Outline
Presentation Outline Transaction Overview About PureCircle Transaction Rationale Summary Q&A 25
Slide 26: Summary
Summary Olam and Wilmar in 50:50 JV to invest US$106.2m in 20% stake in PureCircle, the strongest proxy to the growing natural HIS market based on its patented franchise in producing natural, high-intensity stevia- based sweeteners of highest purity levels Investment strategically positions Olam and
Slide 27: Q&A
Q&A 27