Omodele Adigun
Two years after De-United Foods Industries Limited (DUFIL) acquired Dangote Noodle from Dangote Flour Mills (DFM) PLc, Olam International Limited, a Singaporean agro-allied company, on Tuesday offered to acquire the DFM itself for N130 billion.
Dangote Flour Mills, in a notice to the Nigerian Stock Exchange (NSE), said that the total consideration offered by Olam to acquire its five billion shares is N130 billion.
Olam, through its subsidiary, Crown Flour Mills, currently owns over five million shares of DFM and is bidding to take over the entire company.
It stated that Olam was bidding to acquire all the outstanding and issued shares of DFM not currently owned by Olam through its subsidiary, Crown Flour Mills Limited.
The notice signed by Mr Thabo Mabe, a director of the company, said the transaction would be on the basis of debt free, cash free, payable in cash at the close of the proposed transaction.
The deal, according to Dangote Flour, would be on the basis of debt free, cash free at the end of the transaction, which means working capital and debt value would be netted out at the end of the transaction.
“If conditions of the transactions are satisfied and sanctioned by the court, the company would be delisted from NSE,” it said.
It however said the offer was subject to, among other considerations, shareholders’ approval, regulatory approvals, and the sanctions of a Federal High Court.
DFM said that the board would review the offer in the best interest of shareholders.
“The board will keep both the capital markets and the public updated on tangible developments in this regard, in line with the applicable regulatory requirements,” it added.
Olam was established in 1989, and now listed on the Singapore Exchange and the bids could be a move by the firm to expand its franchise in Nigeria.
Tiger Brands, a South African firm had in 2012 bought a 63 per cent stake in Dangote Flour and pasta maker, but few years down the line, the Dangote Group bought back the company after the new owners sustained losses repeatedly on its operations.
In April 2017, DFM divested from Dangote Noodle business and sold the assets to rival pasta maker, DUFIL for N3.75 billion ($12.26 million. DFM said it divested from the noodles business after a review of the business portfolio showed it was not strategically viable. DFM came into the noodles business upon the re-acquisition of the Tiger Brands.
According to DFM Group Managing Director, Thabo Mabo, the divestment was part of strategies of focusing on core areas of flour and pasta production where the company has substantial market share.
He said with the divestment, Dangote Flour would now focus on its strengths in flour and pasta and become more profitable by improving in areas of quality, distribution and marketing.