Olam International Offers N120 billion to buy Dangote Flour Mills Plc

Africa’s richest man Aliko Dangote; two(2) years after selling Dangote Noodle Plants to his rival pasta maker De-United Foods Industries for N3.75 billion (US$12.26 million); have recently also put up for sale Dangote Flour Mills (DFM) Plc; the flour and pasta manufacturing unit of his conglomerate.

Is he leaving the pasta business to generate funds for the ongoing Dangote refinery?

Dangote acquired DFM in 2013 from South Africa’s Tiger brands after the company suffered heavy operating losses; But even after the acquisition it continued to post yearly losses until 2017 when it recorded profit. This was however short-lived as it fell back to losses in 2018. In Dangote Flour Mills (DFM) Plc 2018 financial result, the company posted a whooping N1.2 billion loss.

Who would not want to sell off such a loss-making asset?

Olam International offers to buy the the loss-making Flour milling business of Africa’s richest man

Olam International, the global food and agri-business leaders through its subsidiary Crown Flour Mills Ltd initially offered N130 billion (US$361 million) to acquire Dangote Flour Mills (DFM) Plc. Olam in 2010 acquired Crown Flour Mills Ltd in Nigeria and through it, the company have grown a world class wheat milling franchise with strong presence in four Sub-Saharan African countries.

The N130 billion (US$361 million) initially offered by Olam International Ltd is for the acquisition of the entire DFM’s 5 billion shares; Although Olam through its subsidiary Crown Flour Mills already holds 5,113,229 shares of the issued 5 billion shares.

The notice issued to the Nigerian Stock Exchange (NSE) by Dangote Flour Mills Plc stating the receipt of a binding offer from Olam International Limited; notes that there will also be a review of the offer to exclude the shares Crown Flour Mills is already holding.

Following the above statement, Olam International have revised its initially offer to acquire only the shares which are not currently held by its subsidiary Crown Flour Mills Ltd. The fresh offer for final consideration is N120 billion, which also amounts to N24 only per ordinary share.

Upon the successful completion of the transaction; Dangote Flour Mills Plc will be delisted from the Nigerian Stock Exchange.

Shareholders and potential investors should therefore exercise caution when dealing in Dangote Flour Mills Plc’s shares.

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