Deal gives Olam a broader footprint in Nigeria, Africa
THE AFRICA BAZAAR Staff Writer
April 23, 2019
Olam International, a global food and agribusiness listed on Singapore stock exchange said Tuesday it plans to buy one of Africa’s and Nigerian largest grain processing agribusinesses, Dangote Flour Mills for US$ 361 million (NGN 130 billion).
The deal, which requires shareholder and regulatory approvals, will give Olam 100 percent equity ownership of the business, and is part of the company’s strategic efforts to bolster its business holdings in African markets through new investments as well as gain competitive edge in the region over its competitors on the continent. The offer will include ownerships of five of Dangote Flour Mills’ agri-processing plants and their logistics capabilities, including access to the ports in Apapa and Calabar.
Under the deal, Olam will purchase all the outstanding and issued shares of Dangote Flour Mills that it does not currently own through a Scheme of Arrangement. As per the offer terms, the final equity price per share payable to shareholders will be arrived at after adjusting for relevant net debt and net working capital of DFM.
Managing Director and Chief Executive of Olam Grains and Animal Feed K.C. Suresh said the purchase will allow the company to build upon its business in the region to expand its wheat milling capacity in high-growth markets such as Nigeria. “Bringing together Olam and DFM would provide enhanced manufacturing capacity and create synergies with our existing business to deliver improved products to meet customers’ needs in the market. We are confident about the growth prospects in this country and this acquisition, doubling our installed capacity here, is evidence of our long-term commitment to the Nigerian economy,” he said.
Olam International started as an commodity exporting company in Nigeria in 1989, exporting raw cashew nuts to India. The company, which currently have several locations across 21 African countries, including in Burkina Faso, Cameroon, Cote d’Ivoire, Ghana, Gabon, Ethiopia, Morocco and South Africa, in 2010 acquired Crown Flour Mills in Nigeria, and has since invested in and grown a world class wheat milling franchise with a strong regional footprint across across the continent working with smallholder farmers.
Olam currently employs nearly 3000 fulltime employees as well as 7800 seasonal workers across 82 locations in Nigeria. The company said if approved, the deal will allow Olam to leverage its capacity and strength to
“deliver higher value to the Nigerian consumers by supplying them food staples manufactured in Nigeria, at a lower cost” as well as give the company a broader reach across Nigeria
The demand for high-quality flour is expected to continue to grow, driven by increased consumption of convenient and affordable wheat-based products, such as bakery, snacks and pasta, which are popular amongst many Nigerian consumers.
