Tag Archives: Olam

Temasek Loses the Plot

If Temasek saw long-term value in Olam, the moment at which lenders would no longer extend credit would have been the ideal moment to step in. They could then have offered to buy the debt at a substantial discount to face value, taking control of the company in that way. Instead of waiting for Olam’s credit problems to become unmanageable and swooping in to get our citizens a bargain, Temasek has in effect bailed out the foreign lenders. By doing so they are providing them with the reassurance of state ownership, even if not a direct guarantee.

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Christopher Balding: Temasek late purchase of Olam presents little value

According to news reports, Temasek through a subsidiary is going to buy Olam at a 12% premium to the current share price. This is an interesting development and to me raises a couple of questions. First, I am intrigued that Temasek is paying a 12% premium after the stock has already increased 30% since the first of the year. This means that Temasek is either paying nearly a 45% premium to what it could have paid just two months ago and is really slow to spot a value in its own portfolio or insiders were buying the stock in advance of a buy out offer they knew was coming. This 30% increase is even more abnormal considering the Straits Times is essentially flat for the year. Neither scenario is particularly attractive.

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