NIGERIA – Flour Mills of Nigeria (FMN) Plc, Nigeria’s leading integrated Food and Agro-allied group is seeking to stamp dominance in the wheat industry with the acquisition of majority stake in the country’s leading manufacturer of diverse and differentiated range of wheat products, Honeywell Flour Mills Plc (HFMP).
Under the proposed agreement, HFMP’s parent company Honeywell Group Limited will dispose 71.69% stake in the wheat milling outfit to FMN based on an enterprise value of N80 billion (US$193m).
However, the final equity price per share payable will be determined based on HFMP’s adjusted net debt and net working capital at the date of completion which has not yet been revealed and is subject to approval from the appropriate regulators.
Upon completion, HFMP’s wide range of offerings: wheat flour, noodles, semolina, pasta and wheat meal sold under the famous Honeywell brand, will join FMN’s market-leading offerings produced through its affiliates comprising: grain-based foods, sugar, starches, oils, spreads and breakfast cereals sold under the house-hold name Golden Penny.
Customers across the nation will benefit from access to a wider product range and a robust pan-Nigerian distribution network, accessing greater number of points of sale supported by enhanced customer-focused sales teams and redistribution capabilities.
The combination will also serve as a catalyst for an even stronger stream of innovation that is focused on local content offerings.
“For over two decades, we have supported Honeywell Flour Mills to build a strong business with a production capacity of 835,000 metric tonnes of food per annum.
“Following the transaction, Honeywell Group will be strongly positioned to consolidate and expand its investment activities, including as a partner of choice for investors in key growth sectors,” said Honeywell Group Limited Managing Director, Obafemi Otudeko.
The acquisition brings more than 85-years combined track record
By bring together the two trusted and iconic brands, this will create a food business that is better positioned to benefit the growing Nigerian population and leverage opportunities stemming from the African Continental Free Trade Area (AfCFTA).
Stakeholders would benefit from the more than 85-year combined track record of FMN and HFMP and their shared goal of making affordable and nutritious food available to Nigeria’s population.
Meanwhile, the scale of the transaction provides employees of the consolidated company with more career development opportunities in a larger organisation, with the potential to create more jobs in the economy as it will have more brands and categories, and a larger and more geographically diverse footprint.
Omoboyede Olusanya, Group Managing Director of Flour Mills of Nigeria, said, “We believe that this will create an opportunity to combine the unique talents of two robust businesses.
“As a result, we will have a better-rounded and more comprehensive skill set available to us as a combined diversified food business, thus enabling us to better serve our consumers, customers and other stakeholders, whilst providing employees with access to broader opportunities.”
The Nigeria wheat industry is in a dire strait, as the supply gap of the produce seems to be getting wider as time goes by.
According to the US Department of Agriculture’s data, Nigeria produces about 60,000 metric tonnes, and yearly demand stands at between 4.5 and 5.0 million tonnes, leaving a huge deficit gap, forcing the West African country to rely on imports.
The acquisition move will create a more resilient national champion in the Nigerian foods industry, as it will enhance the respective companies’ backward integration programs aimed to boost local production.
Further to that, it will give FMN more competitive edge against other players in the wheat sector such as Olam Nigeria through Crown Flour Mills, BUA Group, Stallion, Dufil, among others.