Singapore-based commodity trader, Olam International has offered to buy Nigeria’s Dangote Flour Mills for an enterprise value of 130 billion naira ($424.9 million).
According to Olam International, the deal will be funded by internal cash resources and existing borrowing. The company, which was founded in Nigeria as a cashew nuts exporter, 30 years ago, has since grown aggressively- spreading its tentacles across 60 countries with a market value of $4.5 billion. This deal will contribute to building a country workforce of almost 3,000, while expanding Olam’s reach in Nigeria’s pasta market, as it looks to cash in on the growing demand of wheat-based products in the region.
“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”, K.C. Suresh, head of Olam’s grains and animal feed division, says in a statement.
The acquisition is also part of a strategic shift towards areas that offer the most demand, including flour milling in West Africa. Nuts, cotton and tropical spices have also been earmarked for expansion.
Dangote Flour Mills’ shares jumped 9.8 percent to 11.75 naira after the offer was announced, valuing the firm at 58.75 billion naira. “
The company’s board will consider the proposal in the best interest of the shareholders, keeping the capital markets and public updated on tangible developments in this regard, in line with the applicable regulatory regulatory demands” Dangote Flours Mills, shared in a statement.
South African Tiger brands, had in 2012, bought a 63 percent stake in Dangote Flour. A few years down the line, however, the company was bought back from the new owners following sustained losses