Africa’s largest indigenous industrial conglomerate, Dangote Industries Limited (DIL) on Tuesday released a public disclosure, announcing the impending sale of its business division, Dangote Flour Mills Plc (DFM). The company may sell off its entire equity ownership to partner, global food and agribusiness leaders, Olam International Limited.
As contained in the document, DFM notified its shareholders, The Nigerian Stock Exchange and the investing public that the Board of DFM has received a binding offer from 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. As at the date of this announcement, Olam, through its subsidiary, holds 5.113.229 shares in the issued share capital of DFM.
The total consideration offered by Olam and being considered by the Board of DFM for the entire 5 billion issued shares of the Company is N130 billion. The document explains that the Consideration represents the enterprise value on a debt-free, cash-free basis, payable in cash at the closing of the proposed Transaction. Furthermore, the proposed transaction would include DFM’s five strategically located facilities engaged in flour and pasta manufacturing, as well as its logistics capabilities including access to the ports of Apapa and Calabar.
“This Consideration will be adjusted for the 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,” the document reads.
“It is I 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, as well as the absence of a material adverse change in DFM. If the conditions of the Transaction are satisfied, and the same is sanctioned by the Court, the Company would be delisted from The Nigerian Stock Exchange.”
This acquisition is part of Olam’s strategy to strengthen its portfolio by investing in proven businesses where it has consistently performed and gained market-leading positions. Similar deals also appear to be a trend for foreign companies penetrating into key sectors within Nigeria’s market. Earlier this month, Ventures Africa reported that London based Helios Investments acquired 100 percent equity ownership of Axxela, a subsidiary of Oando PLC.
The Board will review the Offer in the best interest of the shareholders. It will also keep the capital markets and the public updates on tangible development in this regard, in line with the applicable regulatory requirements.
Shareholders and potential investors are advised to exercise caution when seeking in DFM’s shares until a further announcement is made.