The Board of Dangote Flour Mills Plc, a subsidiary of The Dangote Group, has in a corporate disclosure, notified the Nigerian Stock Exchange (NSE), its shareholders and the investing public on Tuesday, April 23, 2019, of the receipt of a binding offer from Olam International Limited to acquire all the outstanding and issued shares of Dangote Flour Mills Plc that are not currently owned by Olam through its subsidiary, Crown Flour mills Limited.
Director at Dangote Flours, Thabo Mabe, in a signed statement, said, “Olam International has indicated interest to buy all the outstanding and issued shares of the flour mills company that are not currently owned by Olam through its subsidiary, Crown Flour Mills Limited.” He further stated that “the Board will review the offer in the best interest of the shareholders. The Board will keep both the capital markets and the public updated on tangible development in this regard, in line with the applicable regulatory requirements.”
What is the situation before this announcement?
Prior to the date of this announcement, Olam International Limited, through its subsidiary, held over 5.1 million shares in the issued share capital of Dangote Flour Mills, representing a 1% stake in the company. The total offer by Olam currently being considered by the Board of Dangote Flour Mills for the entire 5 billion issued shares of the company, is a value worth of N130 billion.
This figure represents the enterprise’s value on a debt-free, cash-free basis, which is payable in cash at the closing of the proposed transaction. “The final price to be paid to the shareholders of the company would be adjusted downward to exclude the shares held by Olam through its subsidiary,” the statement reads in part.
Why would Dangote sell out to Olam International?
Sources report that two years ago, the group also traded a unit of the business, Dangote Noodles plant, to rival pasta producer De-United Foods Industries for N3.75 billion.
Over the years, the flour company has faced a tough business environment in Nigeria. The Flour company was sold to The Dangote Group in 2013 by South Africa’s Tiger brands as a result of operating losses. Since then, the establishment owned by Africa’s richest man, Aliko Dangote, has reported several losses until 2017, when it returned to revenue making. It fell back into losses in 2018.
Current financial standing of the company in relation to the sale.
In a 2018 financial report released by Dangote Flour Mills Plc in March 2019, the company posted a loss of N1.2 billion recorded for the year; over the years, the unnerving Apapa gridlock and illegal smuggling of products have hampered business growth.
About Dangote Flour Mills Plc
Dangote Flour Mills, a subsidiary of the Dangote Group, has locations across Nigeria – Apapa, Ikorodu, Ilorin, Kano and Calabar and offers downstream value-added products through subsidiary companies. The business unit currently has one exclusively owned subsidiary – Dangote Pasta Limited – with products such as Dangote Sugar, Dangote Pasta and Flours.