The deal will be done through a Temasek unit, Breedens Investments. Breedens, along with Olam's family share holders, members of its executive committee, and Arandda Investments, another Temasek unit, already hold around 52.5 percent of Olam shares.
"Breedens wishes to increase its shareholding to support Olam's strategy and growth plans for the long term," it said in a statement.
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The offer price of S$2.23 per share represents an 11.8 percent premium over Olam's last traded price.
Breedens is not planning at this point to take the company private, intending to Olam remain listed in Singapore unless it becomes in breach of the exchange's requirement that at least 10 percent of shares be freely floated.
Breedens is also offering to buy Olam's outstanding convertible bonds and warrants.
Olam, which is one of the world's biggest coffee and rice traders, had to be propped up by Temasek after the trading firm came under attack from short-seller Muddy Waters in late 2012 for its accounting practices.
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The company's shares plunged as much as 22 percent in the weeks after the allegations. Olam denied the short-seller's claims, but drew up a plan to cut its capital spending and debt levels in order to address its investors' concerns.
Its shares have since recovered and were last at S$1.995, their highest level since October 2012, before trading was suspended on Thursday morning, pending an announcement. The shares have climbed 25 percent in the past two months.
Temasek subscribed to a $712.5 million cash call in January 2013 to bolster the firm's finances.
Last month, Olam reported a 12.5 percent drop in second-quarter profit on weaker sales and commodity prices.
Credit Suisse Group AG, DBS Group Holdings Limited and United Overseas Bank Ltd are acting as advisors on the deal.