January 31, 2012

Singapore's Olam International plans to buy a 75% stake in Russian Dairy Co, or Rusmolco, for US$75 million under a dairy and grains farming cooperation agreement. 

The transaction, which is subject to closing conditions, net debt and working capital adjustments, values the entire Russian company at US$130 million, said Olam in a press release.

As a result of the investment, the board of Rusmolco will include five Olam nominees and one independent director.

The stake purchase is the first step of the two companies' collaboration on developing dairy and grains farming in the Penza region of Russia.

As part of the partnership, Rusmolco will invest up to US$400 million in the next four to five years to expand the area under grains to 106,000 hectares (261,900 acres) from the current 52,000 hectares and also to build dairy farms. At a later stage, they will spend more money to expand it to 130,000 hectares.