24 Apr 2019 --- Global food and agri-business Olam International has submitted a binding offer to acquire 100 percent equity ownership of Dangote Flour Mills Plc (DFM), a flour and pasta manufacturer in Nigeria, for an enterprise value of NGN 130 billion (approximately US$361 million) on a debt free, cash free basis. The move comes as Olam anticipates demand for flour in Nigeria to continue to grow, driven by increased consumption of convenient and affordable wheat-based products – such as baked goods, snacks and pasta – which are popular among local consumers. Acquiring DFM’s infrastructure hopes to give Olam International a broader reach across the Nigerian population.

The proposed transaction would include DFM’s five strategically located facilities engaged in flour and pasta manufacturing, 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 prioritized platforms for growth, to expand our wheat milling capacity in high-growth markets, such as Nigeria,” says 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, 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 further adds. 

The company notes that it will further leverage its capacities global sourcing, freight, risk management and operational excellence to deliver operational and cost efficiencies, which it hopes will deliver higher value to the Nigerian consumers by supplying them with 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 still subject to, among 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).   

By Benjamin Ferrer