Olam Off 7.0%; Confirms Dairy Farmers Interest

Olam (O32.SG) shares heading lower as convertible bond issue, news of potential M&A unsettles investors; stock down 7.0% at S$2.77 with support tipped at S$2.60 (May 26 low). Commodities player confirms it is mulling bid for Australian branded dairy business Dairy Farmers; CFO says on conference call, "our M&A team is having a look at it, but no formal bid has been made by us." Analysts estimate Dairy Farmers could fetch up to A$900 million, with rising commodity prices generating lots of interest in the takeover target. CFO also confirms that company has submitted bid for assets of Ivory Coast Cotton producer La Compagnie Cotonniere Ivoirienne, with Ivory Coast newspaper Fraternite Matin reporting assets worth around US$19 million. While investors may like that company is keen to expand its footprint as it rides the soft commodities boom, moves being overshadowed at present by worries over dilution from fund raising, execution risks.