NIGERIA – Olam International Limited, multinational food and agribusiness company through its Nigerian subsidiary, Crown Flour Mills Limited is set to acquire Dangote Flour Mills Plc (DFM) for US$331 million (N120 billion) at N24.00 per share.
This follow an unanimously endorsement of the buyout offer by shareholders of Dangote Flour Mills Plc. The acquisition will be carried out through a Scheme of Arrangement.
Dangote Flour Mills, Nigeria’s leading wheat milling company, had in April this year received a binding offer from Olam to acquire all outstanding and issued shares not currently owned by it.
However, the fact that Crown Flour Mills held a total of 5,113,229 units of shares in Dangote Flour Mills and intended to buy out the entire issued shares of Dangote Flour Mills led to a court-ordered meeting.
By then, the board of Dangote Flour said that it was considering the US$361 million offer for the entire five billion issued shares of the company- which represented the enterprise value on a debt-free, cash-free basis and payable in cash at the closing of the proposed transaction.
Most of the shareholders who spoke at the meeting lauded the company’s management for the noble decision, describing it as one, in the best interest of the shareholders.
With the acquisition, the entire 4,994,886,771 ordinary shares of 50 kobo each in DFM held by the scheme shareholders of the company will be transferred to Crown Flour.
The N24 per share that will be given to the shareholders for 50 kobo shares held represents a 124 per cent premium on the share price of DFM as at the close of April 18, 2019 being the last business day prior to the date the proposal was received and announced on the floor of the Exchange.
It also includes a 145 per cent premium on the three-month weighted average share price of the company as at 18 April, 2019.
The Managing Director of Crown Flour Mills Limited, Anurag Shukia said his company intends to maintain and expand DFM’s business as well as provide enhanced manufacturing capacity and create synergies to deliver improved products to customers across the country.
DFM will also enable the company to double its production capacity by adding five flour mills that it already operates across Nigeria into Crown Mills operations, a deal that gives Olam economies of scale to operate in the sector.
The acquisition of DFM marks the third deal that Olam has closed in Nigeria as the global agribusiness company continues to cement its leadership position in Nigeria’s milling industry and execute its growth strategy in Africa.
With the acquisition, Olam said it seeks to improve efficiencies in the company to ensure that the DFM is well positioned to tap into the growing milling and baking industry.
Currently, Olam through its subsidiaries in Nigeria has operations in milling sector and recently made a US$150 million investment in poultry and fish feed production to further expand its operations.
Olam says that despite the recent economic hardships in the country, the company believes that the Nigerian economy is going to ‘explode’ in the near future adding it will continue investing in the country.