Tuesday, April 23, 2019 / 02:01PM / By
Global food and agri-business leaders, Olam International is set to acquire full ownership of Dangote Flour Mills Plc (DFM), a flour and pasta manufacturer in Nigeria, for US$ 361 million, amid growing demand for bakery and snack foods in the country.
The deal is part of the company’s stated strategy of strengthening its portfolio by investing in proven businesses that have consistently performed and gained market leading position
As part of the purchase, it is expected that DFM’s five strategically located facilities within flour and pasta manufacturing are to be included, as well as its logistics capabilities including access to the ports of Apapa and Calabar.
“The acquisition of Dangote Flour Mills Plc supports the strategy of the Grain and Animal Feed business, one of Olam’s prioritised platforms for growth, to expand our wheat milling capacity in high-growth markets, such as Nigeria,” said K.C. Suresh, managing director and CEO of Olam Grains and Animal Feed.
“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.
“Since 2010, when we first acquired Crown Flour Mills in Nigeria (pictured), 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 Dangote Flour Mills Plc would provide enhanced manufacturing capacity and create synergies with our existing business to deliver improved products to meet customers’ needs in the market,” he added.
The growth in high-quality flour is expected to continue to grow, driven by increased consumption of convenient and affordable wheat-based products, such as bakery, snacks and pasta, which are popular among many Nigerian consumers.
Olam’s and Dangote Flour Mills Plc’s complementary manufacturing footprint would allow a broader reach across the Nigerian population. Olam will further leverage its strengths and scale in global sourcing, freight, risk management and operational excellence to deliver operational and cost efficiencies which in turn would deliver higher value to the Nigerian consumers by supplying them food staples manufactured in Nigeria, at a lower cost.
The proposed transaction would mean Olam acquiring all the outstanding and issued shares of Dangote Flour Mills Plc 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 Dangote Flour Mills Plc.
The transaction is subject to, amongst others, the approval of Dangote Flour Mills Plc’s shareholders, regulatory approvals, the sanction of the Federal High Court of Nigeria, as well as the absence of a material adverse change in Dangote Flour Mills Plc. Upon satisfactory fulfilment of the conditions, Dangote Flour Mills Plc would be delisted from the Nigerian Stock Exchange (NSE).
The Notice To The Market From The NSE
Dangote Flour Mills Plc (DFM” or the Company’) hereby notifies its shareholders, The Nigerian Stock exchange and the investing public that the Board of DFM has received a binding offer (the “Offer”) from Olam International Limited (‘Olam’), to acquire all the outstanding and issued shares of DFM that are not currently owned by Olam through its subsidiary, Crown Flour Mills Limited (the ‘Transaction’). As at the date of this announcement Olam, through its subsidiary, holds 5,113,229 shares in the issued share capital of Dangote Flour Mills Plc.
The total consideration (the “Consideration’) offered by Olam and being considered by the Board of Dangote Flour Mills Plc for the entire 5,000,000,000 issued shares of the Company is N130,000,000,000.00 (One Hundred and Thirty Billion Naira Only). The Consideration represents the enterprise value on a debt-free, cash-free basis, payable in cash at the closing of the proposed Transaction. This Consideration will be adjusted for net working capital and net debt as of 31 March 2019 or any other later date that may be agreed by Olam and the Board of DFM to arrive at the final price payable to equity shareholders. The final price to be paid to the shareholders of the Company would be adjusted downwards to exclude shares held by Olam through its subsidiary.
It is intended that the Transaction will be executed through a Scheme of Arrangement, under Section 539 of the Companies & Allied Matters Act Chapter C20 Laws of the Federation of Nigeria 2004 and other applicable laws, rules and regulations.
The offer is subject to amongst other things, shareholders’ approval, regulatory approvals, the sanction of the Federal High Court (the “Court’), as well as the absence of a material adverse change in Dangote Flour Mills Plc. If the conditions of the Transection are satisfied and same is sanctioned by the Court, the Company would be delisted from The Nigerian Stock Exchange.
The Board will review the Offer in the best interest of the shareholders. The Board will keep both the capital markets and the public updated on tangible development in this regard, in line with the applicable regulatory requirements.
Shareholders and potential investors are advised to exercise caution when dealing in Dangote Flour Mills Plc 's shares until a further announcement is made.
The Financial Results
Audited 2018 Results
Graph – One Year Share Price Movement
Visit Dangote Flour Mills Plc IR Page in Proshare MARKETS
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