Saudi Agricultural & Livestock Investment Co. (Salic), backed by the state's Public Investment Fund, is planning to acquire complete control of Singapore-based Olam Group's agricultural business division, sources with knowledge of the situation revealed.

The Saudi entity intends to initiate discussions as early as next year to purchase the outstanding 20% stake in Olam Agri Holdings that it does not currently control, following the completion of its majority acquisition, according to a source who requested anonymity due to the confidential nature of the discussions.

Olam Group's stock declined by up to 0.5% during early Wednesday trading sessions.

Salic concluded a long-anticipated agreement with Olam Group earlier this year to expand its ownership in Olam Agri to 80% through an approximately US$1.8 billion ($2.33 billion) investment. The transaction is anticipated to receive final clearance by year-end following regulatory approval processes, sources familiar with the agreement indicated.

This development would create the framework for Salic to negotiate the acquisition of the remaining ownership interest, the sources noted. Under the February agreement with Olam Group, Salic secured a call option allowing it to purchase the remainder of Olam Agri within a three-year period.

Salic confirmed it maintains the right to exercise the call option within the established timeframe, while Olam Group declined to provide commentary.

Acquiring full control of Olam Agri aligns with Saudi Arabia's food security objectives, which emphasize investments in international companies to secure supply chains and encourage production establishment within the kingdom. The nation continues to import approximately 80% of its food requirements, creating vulnerability to supply disruptions amid trade tensions, supply chain pressures, and animal disease outbreaks.

For Olam, the transaction would result in a more streamlined organization concentrated on cocoa and coffee markets, where it maintains position among the world's leading commodity traders.

The agricultural business division, which handles bulk grain trading and produces various products from edible oils to pasta, emerged from Olam's structural reorganization in 2020. The company had previously explored initial public offering opportunities in both Singapore and Saudi Arabia, but regulatory delays prompted the decision to sell approximately one-third of the unit to Salic in early 2022.

Salic's current portfolio includes ownership positions in Brazilian meat producer Minerva, Canadian grain handler G3, and Indian rice manufacturer LT Foods, among other investments. Complete ownership of Olam Agri would strengthen Salic's position in global grain markets, where its current exposure remains limited.

A full acquisition of Olam Agri would further demonstrate that Saudi Arabian entities continue advancing transactions supporting the kingdom's economic diversification strategy, despite increasing fiscal pressures.