Olam acquires milling and pasta assets from BUA Group

NIGERIA – Diverrsified commodity trader Olam International Limited has acquired Amber Foods Limited, a Nigerian miller and pasta producer for US$275 million.

Amber Foods, through its 100% owned subsidiary Quintessential Foods Nigeria Limited owns the wheat milling and pasta manufacturing assets of the BUA Group in Nigeria.

The BUA Group, a diversified foods and infrastructure business group in Nigeria, is among the top five wheat millers in the country with wheat milling and pasta manufacturing capacities of 3,760 and 700 metric tonnes per day (TPD) respectively.

The assets to be acquired include two wheat mills and a pasta manufacturing facility in Lagos, a non-operating mill in Kano in the North of Nigeria, and a wheat mill and a pasta manufacturing plant under construction in Port Harcourt in the Southeast of Nigeria.

Accoording to Olam, the acquisition will strengthen its position as the number two wheat miller by sales volume and make it a leading pasta player in Nigeria.

Olam’s total wheat milling capacity in the country will increase from its current 2,380 TPD to 6,140 TPD once the facilities in Port Harcourt are completed in June 2016, the company notes in a statement.

The acquisition will further build on Olam’s capacity in Africa, doubling its total wheat milling capacity in Sub-Saharan Africa to 7,640 TPD, it adds.

The deal comes shortly after Tiger Brands from South Africa walked out of its investment in Dangote Flour Mills, another big miller, citing tough business environment in the country, having spent millions of dollars in impairment charges since taking over the miller in 2013.

The company has identified Grains as one of the six prioritised platforms for investment and accelerated growth in Africa.

The company has grown in this platform since 2010 when it acquired Crown Flour Mills (CFM) in Nigeria. Since then, it has expanded its capacity at CFM in 2013 and set up milling operations in Ghana, Senegal and Cameroon.

“Nigeria is a high growth milling market with volumes expected to reach 5 million metric tonnes in 2020 as population growth and urbanisation increase the demand for wheat-based products.

The size of the Nigerian flour market is in excess of US$2.0 billion, growing at 3.5% per year while the pasta market is growing at the rate of 8.0% per year, said Suresh.

“We are very pleased to acquire these strategically located, port-based assets as undeveloped land at Nigerian ports is increasingly difficult to access.

They are highly complementary to our existing asset base in Lagos and Warri, and will not only strengthen our current market position and deliver multiple synergies but also enable us to access the high growth areas in the North and Southeast of Nigeria,” he concluded.

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