SINGAPORE (Aug 31): Analysts are “positive” about Olam International’s partnership with Mitsubishi Corp (MC), which saw the Japanese conglomerate invest in a 20% equity stake of Olam.

Last Friday, Olam announced that MC bought some 332.7 million of its shares for $1.53 billion at an issue price of $2.75 per share. The $915 million raised from the sale will be used for opportunistic acquisitions and other growth initiatives.

Olam could stand to benefit from MC’s know-how in rice farming and milling, according to DBS Vickers Securities.

The food item distributor and logistics provider may also potentially distribute MC’s package food brands in Africa, it says.

In the near term, a joint venture will be established in Japan to act as an importer and marketer of various agricultural products.

“We are positive on the partnership as it presents new business opportunities for Olam, allowing it to tap on MC’s global distribution network,” writes DBS Vickers analyst Mervin Song in a note on Monday.

Meanwhile, OCBC Investment Research affirms the Mitsubishi deal as “medium-term positive”, but not in the short term.

“While we are positive on the deal, we do not expect to see any immediate impact on the business, at least not in 2015,” OCBC analysts Carey Wong and Andy Wong Teck Ching write in a note on Monday.

Hence, it maintained its “hold” rating with an unchanged fair value of $1.88.

DBS Vickers also kept the same rating, but says it is due investors’ lack of confidence over the integration of the ADM Cocoa acquisition and the delay in generating positive free cash flows until next year.

“Thus, we maintain our hold call with a slightly higher target price of $2.14,” says Song.

At 2.16 pm today, Olam slipped two cents or 0.9% to $2.05 with some 18.9 million shares traded.