Ebro Foods to acquire rice milling facility in India

Spanish rice and pasta manufacturer Ebro Foods has entered into an agreement to acquire a rice milling facility in Haryana, India, from Olam International for $14.5m.

The rice milling facility, which was acquired by Olam in 2008, has a processing capacity of 18t of paddy per hour, equivalent to more than 100,000t of rice annually.

Ebro Foods noted that the acquisition will enable the company and its subsidiaries to have a steady supply of basmati rice, while allowing the company to gain access to India’s high-growth domestic market for its wide range of rice, pasta and sauces products.

Olam Rice business global head Rajeev Raina said that even though the basmati part of the business provided some sourcing synergies, the sales and distribution channel was distinct from the non-basmati rice business.

"Furthermore, significant investments in branding were required to grow the franchise," Raina said.

"Through this sale we are monetising more than the book value of fixed investments, as well as releasing working capital – which will be used to reinforce our core supply chain and trading business in non-basmati rice from India and other origins for our conventional markets," Raina added.

The transaction, which is subject to necessary regulatory approvals, is expected to be completed by the end of this month, following which all employees in the milling facility will be shifted to Ebro Foods and its sales network.

Olam International is a Singapore-based processor of agricultural products and food ingredients, supplying various products across 16 categories to over 12,300 customers across the world.