Olam International sets $361 million deal for Nigeria’s Dangote Flour Mills

Global food and agri-business Olam International is set to acquire complete ownership of Dangote Flour Mills (DFM), a flour and pasta manufacturer in Nigeria, for US$ 361 million, amid growing demand for bakery and snack foods in the country.

The deal is part of the company’s stated strategy of strengthening its portfolio by investing in proven businesses that have consistently performed and gained market leading positions.

As part of the purchase, it is expected that DFM’s five strategically located facilities within flour and pasta manufacturing are to be included, as well as its logistics capabilities including access to the ports of Apapa and Calabar.

“The acquisition of DFM supports the strategy of the Grain and Animal Feed business, one of Olam’s prioritised platforms for growth, to expand our wheat milling capacity in high-growth markets, such as Nigeria,” said K.C. Suresh, managing director and CEO of Olam Grains and Animal Feed.

“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.

“Since 2010, when we first acquired Crown Flour Mills in Nigeria (pictured), Olam has invested in and grown a world class wheat milling franchise with a strong regional footprint across four countries in Sub-Saharan Africa. 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,” he added.

The growth in 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 among many Nigerian consumers.

Olam’s and DFM’s complementary manufacturing footprint would allow a broader reach across the Nigerian population. Olam will further leverage its strengths and scale in global sourcing, freight, risk management and operational excellence to deliver operational and cost efficiencies which in turn would deliver higher value to the Nigerian consumers by supplying them food staples manufactured in Nigeria, at a lower cost.

The proposed transaction would mean Olam acquiring all the outstanding and issued shares of DFM 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.

The transaction is subject to, amongst others, the approval of DFM’s shareholders, regulatory approvals, the sanction of the Federal High Court of Nigeria, as well as the absence of a material adverse change in DFM. Upon satisfactory fulfilment of the conditions, DFM would be delisted from the Nigerian Stock Exchange (NSE).

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