Flour Mills of Nigeria Plc. (FMN) today announced that it has entered into a definite agreement to take over Oba Otudeko’e led Honeywell Flour Mills Plc (HFMP), in a deal worth N80 billion. This is following the latter’s decision to sell 71.69% stake to the former.
This is according to a notice filed with the Nigerian Exchange Limited (NGX) and seen by naijabusiness.com.ng, which partly reads: ‘’Flour Mills of Nigeria Plc. (‘’FMN’’) today announced that it has reached an agreement with Honeywell Group Limited (‘’HGL’’), the majority shareholder of Honeywell Flour Mills Plc. (‘’HFMP’’), to acquire a 71.69% majority shareholding interest in HFMP. In addition, FMN also entered into an agreement with the FNB Holdings Group to acquire the Group’s 5.06% equity in HFMP. Consequently, upon completion of the acquisition, and subject to obtaining all requisite regulatory approvals, FMN is set to hold a circa 76.75% equity interest in HFMP.’’
The deal which is in line with FMN’s global growth strategy is anticipated to add great value to the national economy, through the combination of two businesses with shared goals that will create a more resilient national champion in the Nigerian foods industry, ensuring long-term job creation and preservation.
In addition, the deal will create a food business that is better positioned to benefit the growing Nigerian population and leverage opportunities stemming from the African Continental Free Trade Area (‘’AfCFTA’’).
As of the period of reporting this, the transaction is yet to be completed, as it is subject to regulatory approval. In view of this, shareholders and potential investors are advised to exercise caution when dealing in FMN’s shares until a further announcement is made
Commenting on the recent development, Honeywell Group Limited Managing Director, Obafemi Otudeko said: “Today’s announcement is in line with the evolution of Honeywell Group and our vision of creating value that transcends generations. For over two decades, we have supported Honeywell Flour Mills to build a strong business with a production capacity of 835,000 metric tonnes of food per annum. Following the transaction, Honeywell Group will be strongly positioned to consolidate and expand its investment activities, including as a partner of choice for investors in key growth sectors.”
On the other hand, Omoboyede Olusanya, Group Managing Director of Flour Mills of Nigeria, said: “The proposed transaction is aligned with our vision not only to be an industry leader but a national champion for Nigeria. We believe that this will create an opportunity to combine the unique talents of two robust businesses. As a result, we will have a better-rounded and more comprehensive skill set available to us as a combined diversified food business, thus enabling us to better serve our consumers, customers and other stakeholders, whilst providing employees with access to broader opportunities.”
Naijabusiness.com.ng gathered that Flourmill have already paid for the acquisition already but awaiting regulatory approval. It is worthy to note that as of its latest result, Flour Mills has a total debt balance of N142.8 billion and a cash balance of N52.6 billion, so it is unclear how it paid for the transaction.
On the other hand, Honeywell has a debt balance of N78.5 billion and a cash balance of N27.3 billion. As at the period of reporting this, Honeywell flour mills share price is up by 9.73%, while Flour Mills is trading flat (no movement).