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Leading food and agri-business company, Olam International, has made a final offer for the acquisition of a 99.9 percent equity stake in Dangote Flour Mills (DFM) Plc. The company made a revised binding offer with final consideration of N120 billion, implying N24 only per ordinary share.

In a regulatory filing at the Nigerian Stock Exchange (NSE), the board of directors of DFM through Secretary Aisha Isa, said Olam has indicated that it would be undertaking the acquisition through its Ibadan-based subsidiary, Crown Flour Mills Limited. 

Once completed, the transaction will make the flour milling company a wholly-owned subsidiary of Olam, which already has a subsisting 0.10 percent equity stake. And Olam plans to delist DFM from the NSE after the sale has been concluded. 

“The Board has carefully considered the Addendum and the Initial Offer (“Revised Offer’) and will, subject to obtaining regulatory approvals, recommend the Revised Offer to the shareholders of the Company at the court-ordered meeting, for their consideration and approval,” DFM said in a statement. 

Earlier in April, the board of directors of DFM accepted the full takeover of the company when Olam made an offer of N130 billion. The sum represented the enterprise value on a debt-free, cash-free basis and payable in cash at the closing of the proposed transaction. However, both parties agreed that the initial total consideration should be adjusted for net working capital and net debt as at March 31, 2019, or any other later date that may be agreed by Olam and the DFM board.

With the revised bidding offer, the shareholders of DFM will be paid the final consideration of N24 per share in accordance with the terms of the Scheme Document, which will be presented for shareholders’ approval at a court-ordered meeting to be convened for that purpose. Also, the terms and conditions of the Initial Offer as earlier notified are still applicable. 

This is the second time Dangote will be selling the flour miller. In 2012, Dangote Group’s industrial unit sold 63.35 of its equity stake in DFM to one of South Africa’s largest food companies, Tiger Brands Limited, in a $181.9 million deal. The agreement saw the transfer of 3.17 billion ordinary shares out of Dangote Group’s 3.67 billion ordinary shares of 50 kobo each in DFM to Tigers Brand.

Barely two years after the deal, Tiger Brands wrote off about half of its investment in the company, about $82 million, because of what it described as “underperformance” and “excess milling capacity that continues to increase in the Nigerian flour market.”

Being one of the world’s largest suppliers of cocoa beans and products, coffee, cotton, and rice, Olam’s acquisition of DFM will enable it to build on a country workforce of almost 3,000 while tapping local demand for bakery, snacks and pasta products. The purchase is also reportedly part of a strategic shift toward areas that offer the most demand, including flour milling in West Africa.

Olam International was founded in Nigeria in 1989 with an initial focus on the procurement of primary commodities like cashews, cocoa, and shea nut. The company has grown over time, operating in more than 60 countries with a market value of $4.5 billion.

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