Olam International acquires onion processor Dehydro Foods

Olam International, a Singapore-based processor of agricultural products and food ingredients, has acquired Dehydro Foods, a leading producer of dehydrated onions and herbs in Egypt, for $30.8m.

The all-cash deal, which includes $3.5m for net working capital, is expected to be immediately earnings accretive to Olam, and deliver a 28% margin in EBITDA.

Dehydro Foods, established in 2000, is a leading exporter of dehydrated onions.

About 85% of Dehydro Foods’ revenue is generated through its dehydrated onion business, while the remaining is generated through processed herbs and specialty vegetable oils business.

The company has two facilities, which have a total annual capacity of 8,500 metric tonnes of dehydrated onions and 2,300 metric tonnes of herbs in finished form.

This deal is a part of its Olam’s strategy to become a leading supply chain partner to leading global customers, even as food companies seek to outsource their raw material and ingredient supply chain to third party suppliers.

Olam Spices & Vegetable Ingredients president and global head Greg Estep said that as Dehydro is accredited with major customers, it has a strong potential for growth in exports into the Middle East, Europe, Brazil and Japan.

"It fits very well with our overall spices portfolio where we have a global market leading position," Estep added.

Olam expects the acquisition to complement its spices and dehydrated vegetable businesses in the US, China and India, bringing further synergies in sourcing, value-added processing and distribution.

Olam noted that Egypt is a potential growth area for dehydrated vegetables, due to its proximity to the Middle East and Europe, and the production of high-quality onions, which are processed at competitive costs.