Olam International Ltd., the commodity trader targeted by Carson Block, dropped its defamation lawsuit against the short seller and his research firm Muddy Waters LLC, bowing to advice from shareholders to focus on its business.
“After considering feedback received from several of its shareholders, Olam has decided it should now move forward and focus resources and management attention to deliver value for its continuing shareholders and stakeholders,” the world’s second-largest rice trader said in a statement to the Singapore stock exchange today.
Olam said it hasn’t been able to serve the lawsuit filed in the Singapore High Court on Block. The company had sought unspecified damages, costs and an injunction against republication of Block’s comments made at a hedge-fund conference in London in November.
“Muddy Waters always expected a favorable outcome from this suit, whether at this stage or through a verdict,” Block said today in an e-mail.
The public war of words between Olam and Block began on Nov. 19 when the Muddy Waters research director questioned the Singapore-based company’s finances and accounting practices. Olam Chief Executive Officer Sunny Verghese said the statements were designed to panic shareholders of the company and the stock slumped about 20 percent by mid-December.
On March 20, it topped the price it last traded at in Singapore before Block’s attack, hitting S$1.765. The shares fell 0.3 percent to close at S$1.665 today.
“There’s no point pursuing a company or person with no assets here,” said David Gerald, president of the Securities Investors Association of Singapore, which represents retail shareholders. “Even if Olam eventually wins, it’s just a paper judgment. It’s better to focus on what they do best instead of spending time and effort on the lawsuit.”
Since Block and Muddy Waters first questioned Olam’s finances, the company has raised $712.5 million in new bonds, scrapped an investment in a sugar mill and said it may ratchet back spending as part of an annual review of its businesses, to be completed this month. It’s also won increased backing from Temasek Holdings Pte., Singapore’s state investment firm and now Olam’s biggest shareholder.
Stephen Forshaw, a Temasek spokesman, declined to comment.
The case is Olam International Ltd. v Muddy Waters LLC, Carson Block. S987/2012. Singapore High Court.