Olam International has acquired Amber Foods Limited, which through its 100% owned subsidiary Quintessential Foods Nigeria owns the wheat milling and pasta manufacturing assets of the BUA Group in Nigeria, for a total enterprise value of US$275 million ($397 million).
The BUA Group, a diversified foods and infrastructure business group in Nigeria, is among the top five wheat millers in the country with wheat milling and pasta manufacturing capacities of 3,760 and 700 metric tonnes per day (TPD) respectively.
The assets to be acquired include two wheat mills and a pasta manufacturing facility in Lagos, a non-operating mill in Kano in the North of Nigeria, and a wheat mill and a pasta manufacturing plant under construction in Port Harcourt in the Southeast of Nigeria.
Olam’s total wheat milling capacity in the country will increase from its current 2,380 TPD to 6,140 TPD once the facilities in Port Harcourt are completed in June 2016.
K C Suresh, Managing Director & CEO of Olam Grains, said: “Nigeria is a high growth milling market with volumes expected to reach five million metric tonnes in 2020 as population growth and urbanisation increase the demand for wheat-based products. The size of the Nigerian flour market is in excess of US$2.0 billion, growing at 3.5% per year while the pasta market is growing at the rate of 8.0% per year.”
To be funded through a combination of debt and internal accruals, the acquisition is expected to be earnings accretive from the first year after consolidation. Olam expects the acquired business to generate an EBITDA to Invested Capital return of 13-16% when it reaches steady-state in 2018.
Olam closed 0.3% higher at $1.695 on Friday.
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The BUA Group, a diversified foods and infrastructure business group in Nigeria, is among the top five wheat millers in the country with wheat milling and pasta manufacturing capacities of 3,760 and 700 metric tonnes per day (TPD) respectively.
The assets to be acquired include two wheat mills and a pasta manufacturing facility in Lagos, a non-operating mill in Kano in the North of Nigeria, and a wheat mill and a pasta manufacturing plant under construction in Port Harcourt in the Southeast of Nigeria.
Olam’s total wheat milling capacity in the country will increase from its current 2,380 TPD to 6,140 TPD once the facilities in Port Harcourt are completed in June 2016.
K C Suresh, Managing Director & CEO of Olam Grains, said: “Nigeria is a high growth milling market with volumes expected to reach five million metric tonnes in 2020 as population growth and urbanisation increase the demand for wheat-based products. The size of the Nigerian flour market is in excess of US$2.0 billion, growing at 3.5% per year while the pasta market is growing at the rate of 8.0% per year.”
To be funded through a combination of debt and internal accruals, the acquisition is expected to be earnings accretive from the first year after consolidation. Olam expects the acquired business to generate an EBITDA to Invested Capital return of 13-16% when it reaches steady-state in 2018.
Olam closed 0.3% higher at $1.695 on Friday.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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