The deal will enable Olam to build on a country workforce of almost 3,000 while tapping local demand for bakery, snacks and pasta products.
Wednesday 24, April 2019
(Bloomberg) --Olam International made a cash bid to buy Dangote Flour Mills (DFM) of Nigeria as the Singapore-based agriculture trader looks to expand in West Africa as part of a rejig of its portfolio.
Olam will offer NGN 130 billion ($362 million) for Lagos-based DFM, which is part of the business empire of Aliko Dangote, Africa’s richest man.
Dangote Flour Mills stated that the price was calculated on a debt-free basis, and will be adjusted to account for net borrowings.
The move sees Olam going back to its roots. The company was founded in Nigeria as an exporter of cashew nuts 30 years ago and has since grown into a global behemoth with operations in more than 60 countries and a market value of $4.5 billion.
K.C. Suresh, the Head of Olam’s Grains and Animal Feed Division, said, “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.”
The acquisition is also part of a strategic shift toward areas that offer the most demand, including flour milling in West Africa. In January Olam announced that it plans to expand in areas such as nuts, cotton and tropical spices, while it will exit commodities such as sugar and rubber.