June 16, 2016

Olam International announced it has acquired Brooks Peanut Company, the largest peanut sheller in the state of Alabama, in a deal worth $85 million. Brooks is the sixth largest peanut sheller in the U.S., and this acquisition will add 175,000 tons of annual processing capacity to Olam’s existing business, which is the third largest sheller in the U.S.

Peanuts are the cheapest and highest form of vegetable protein, and Olam is the only company in the space with a sourcing and shelling presence in all of the world’s top origination countries including the U.S., India, and Argentina, and a major presence in the world’s top markets of the EU, U.S., China, India, and Southeast Asia.

“We are pleased to have the opportunity to acquire Brooks’ procurement and processing capabilities, which complement our footprint in the U.S. and significantly strengthen our network and product offerings to our customers and growers,” said Anupam Jindel, president of Olan’s global peanut business in a recent press release. “Given our strengths in the US peanut industry and global marketing reach, we feel quite confident that we will be able to take Brooks to its full potential fairly quickly.”

The acquisition, which will be funded through a combination of internal accruals and existing debt facilities is expected to close by the third quarter 2016. It is also expected to be accretive this year, and to meet the forecasted EBITDA on Invested Capital expectation of between 13% and 16% for 2017.

“The acquisition will be earnings and talent accretive from the beginning,” said Joe West, head of Olam’s U.S. peanut shelling operations in a recent press release. “Brooks has a strong leadership team which will continue to manage the operations from Alabama and also help extract synergy value with our existing peanut business. Our combined team will be able to offer highly differentiated products like hi-oleic, bar-ready peanuts to our discerning customers and also our high quality seed to Brooks’ growers, while capitalizing on the growth prospects in the industry.”

The acquisition also follows closely upon Olam’s acquisition of U.S. peanut sheller, McCleskey Mills in December 2014, and further strengthens and integrates Olam into the value chain, from direct farm procurement to shelling, while also expanding the group’s sourcing network into Alabama and Florida.

The U.S. peanut industry currently has the lowest cost of production for peanuts in the world and has the resources, infrastructure, seed technology, and acreage to support expansion. These advantages, helped bring Olam into the U.S. peanut industry since 2007 when it acquired Universal Blanchers LLC for $77 million.

—

Lynda Kiernan