Olam has acquired the tomato processing assets of SK Foods for US$39m, to be funded with internal accruals and borrowings. The acquisition is expected to expand its product range with cross-selling opportunities, generate cost savings through a consolidation of logistics and general functions, and offer an immediate entry into a large and profitable market. The acquisition price is also significantly lower than the replacement cost of US$130m. Our EPS estimates remain unchanged. Cash from its recent fundraising has put the company in a strong position to snap up further attractive assets at distress prices to gain market share and break into new markets. We believe this will support Olam's future growth. Our target price has been lifted to S$2.95, based on 22x CY10 P/E, its historical average, from S$2.05, based on 14x CY10 P/E. Upgrade to Outperform from Neutral.