Mainboard-listed Olam International has agreed to buy tt Timber International from Danish firm Dalhoff Larsen Horneman (DLH) for 29.6 million euros (US$39.4 million).
The proposed acquisition will help Olam expand its tropical hard wood business and seek opportunities to enter the carbon credit market.
It will give Olam an additional 1.6 million hectares in Africa, taking its total concession to 2.3 million hectares in tropical forest and making it one of the world’s biggest certified hard wood supplier.
Sunny Verghese, Olam’s managing director and chief executive, said Olam was buying tt Timber’s assets at a deep discount.
Olam had estimated the concession value at 70 million euros, he said, but DLH’s change in fortune following the financial crisis pushed it to refocus on its wholesale business and reduce its assets to solve liquidity issues.
Robert Hunink, president and global head of Olam’s Wood Products business, said the assets also provide the possibility for Olam to actively seek carbon credits.
He said the company will review building a power plant fuelled by biomass and ways to restore degraded forest areas. The power plant may cost about 12 million euros and save burning 3 million litres of diesel, he added.
Olam said the acquisition would open up new markets in the US, Europe, Northern Africa and strengthen its foothold in India and China.