Crown Flour Mills Limited, a subsidiary of Olam International Ltd, has sealed what could pass for ‘the deal of the year’ in its quest for massive expansion as its N120 Billion offer for the acquisition of Dangote Flour Mills Plc (DFM) has finally been collectively approved the shareholders of the company.
It would be recalled that the acquisition process began in April, 2019 when the Singapore-based company made the first official offer to acquire 100 per cent equity in Dangote Flour Mills Plc. Then Olam offered a sum of N130 billion and it was considered for the acquisition of the entire five billion shares. According to Dangote Flour Mills, the N130 billion offer the N130 billion offer made by Olam represented the enterprise value on a debt-free, cash-free basis and payable in cash at the closing of the proposed transaction.
However, in August, 2019, Olam reduced the offer to N120 billion naira which amounts to N24 per ordinary share. And it was accepted by the board of Dangote Flour Mills but subject to the approval of DFM’s shareholders, regulatory approvals, the sanction of the Federal High Court of Nigeria, as well as the absence of a material adverse change in DFM.
Satisfied by the offer, the shareholders of Dangote Flour Mills held an AGM on the order of the High Court and the deal was approved. This means that Crown Flour Mills, the subsidiary of Olam in Nigeria will take over the ownership of Dangote Flour Mills which upon satisfactory fulfilment of all conditions will be delisted from the Nigerian Stock Exchange (NSE).
As part of the deal, Crown Flour Mill will take over the five facilities of DFM which manufacture flour and pasta at its various plants in Apapa, Calabar, Ikorodu, Ilorin and Kano as well as its logistics capabilities, including access to the ports of Apapa and Calabar.
According to Olam, the deal will be funded by internal cash resources and exiting borrowing. Commenting on the deal, the Managing Director and Chief Executive Officer of Olam Grain and Animal Feed, K.C. Suresh said, “the acquisition of DFM supports the strategy of the Grain and Animal Feed business, one of Olam’s prioritized platforms for growth, to expand our wheat milling capacity in high-growth markets, such as Nigeria.