Olam International to buy Dangote Flour Mills

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Singapore-based commodity trader Olam International Ltd on Tuesday said it will buy Nigeria’s Dangote Flour Mills (DFM) for an enterprise value of 130 billion naira ($424.9 million) and to this effect, has submitted a binding offer to acquire 100% equity ownership of the mills.

The proposed transaction would include DFM’s five facilities engaged in flour and pasta manufacturing, as well as its logistics capabilities, including access to the ports of Apapa and Calabar.

DFM’s mills are located in strategic positions across Nigeria: Apapa, Calabar, Ikorodu, Ilorin and Kano.

The deal will be funded by internal cash resources and exiting borrowing, Olam added.

The Managing Director and Chief Executive Officer of Olam Grain and Animal Feed, K.C. Suresh said, “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.

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“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.”

According to WorldGrain, the acquisition is part of Olam’s strategy to strengthen its portfolio.

“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,” Suresh said.

Under terms of the transaction, Olam would acquire 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 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).

DFM is a Nigerian-based company engaged in wheat milling, flour and pasta manufacturing and distribution.

Olam currently operates wheat milling, flour and pasta manufacturing in Nigeria and Sub-Sharan Africa.

The acquisition announcement comes after Olam unveiled its six-year strategic plan to invest $3.5 billion in several key business areas — including grains and animal feed — while divesting four businesses, part of the company’s 2019-2024 plan.

Yetunde Adegoke

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