Short-seller Carson Block declined to comment on today’s buyout offer for Olam International Ltd., the Singapore-based commodities trader whose stock he has said since 2012 is worthless.
Olam is the subject of a takeover offer by a unit of Temasek Holdings Pte for S$2.23 cash per share, a 12 percent premium to its last close. Block has previously described the company as a sham in the image of disgraced American energy trader Enron Corp., assertions the company repeatedly denied.
In an e-mail to Bloomberg News, Block, the founder of Muddy Waters LLC, declined to comment on the takeover announcement or his position in Olam.
Block announced he was betting against Olam shares at an investor conference in London in November 2012. Since then, the stock is up 14 percent, aided by a gain of 35 percent since the start of February. During that stretch, Olam’s Singapore-traded equities have climbed on 18 of 26 days before being halted earlier today before news of the takeover offer was disclosed.
Buying Olam will give Breedens Investments Pte, a unit of Temasek, control of one of the world’s top three coffee and rice traders. Olam has been cutting spending and selling assets to address investor concern about cash flow. The stock, which closed as low as S$1.395 after Block’s attack, reached a near 17-month high of S$1.995 in Singapore on March 12.
Muddy Waters, which rose to prominence starting in 2011 with bearish research on Chinese companies trading in the U.S., issued a 133-page report on November 2012 saying Olam was “likely to fail.”
Block’s firm reiterated the view in a posting on its website on September 2013. Olam had invested in projects that would fail to generate large enough returns to pay back debt, it said. “In a world where capital is allocated to maximize economic efficiency, Olam’s shares have no value,” Muddy Waters wrote.
All along, the company has said Block was wrong.
“This whole bogey of trying to say that we have some kind of liquidity crisis cannot be corroborated,” Chief Executive Officer Sunny Verghese said Nov. 28, 2012, at a press briefing in Singapore. “I just can’t understand” how Muddy Waters could suggest the company may fail, he said.