Flour Mills of Nigeria Plc (FMN) and Honeywell Group Ltd. (HGL) said they have signed an agreement for a proposed business combination valued at N80 billion.
Both companies said this in a statement posted on the website of the Nigerian Exchange Ltd. (NGX) on Monday.
“FMN and HGL today announced that they have signed an agreement for the proposed combination of FMN through its affiliates and Honeywell Flour Mills Plc (“HFMP”), a portfolio company of HGL.
“At a total enterprise value of N80 billion, HGL will dispose of a 71.69 per cent stake in HFMP to FMN.
“The proposed transaction will combine two businesses with shared goals and create a more resilient national champion in the Nigerian foods industry, ensuring long-term job creation and preservation,” said the statement.
It said a combination of FMN and HFMP would bring together two trusted brands, creating a food business better positioned to benefit the growing Nigerian population and leverage opportunities stemming from the African Continental Free Trade Area (AfCFTA).
The statement added that the final equity price per share payable would be determined based on HFMP’s adjusted net debt and net working capital at the date of completion.
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According to the statement, the proposed combination is subject to approval by the appropriate regulators.
Commenting on the transaction, Managing Director, Honeywell Group Ltd., Mr Obafemi Otudeko, said the announcement was in line with the evolution of Honeywell Group.
“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,” said Otudeko.
Mr Omoboyede Olusanya, Group Managing Director, Flour Mills of Nigeria, said the proposed transaction was aligned with the vision to be 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,” Olusanya said.
The statement further said the complementary transaction combined FMN’s market-leading offerings that included grain-based foods, sugar, starch, oil and breakfast cereals with HFMP’s market-leading diverse and differentiated range of carbohydrate products.
It added that stakeholders would benefit from the more than 85-year combined track record of FMN and HFMP and their shared goal of making affordable and nutritious food available to Nigeria’s population.
“The scale of the transaction provides employees of the consolidated company with more career development opportunities in a larger organisation, with the potential to create more jobs in the economy as it will have more brands and categories, and a larger and more geographically diverse footprint.
“Customers across the nation will benefit from access to a wider product range and a robust pan-Nigerian distribution network, accessing greater number of points of sale supported by enhanced customer-focused sales teams and redistribution capabilities.
“The combination will also serve as a catalyst for an even stronger stream of innovation that is focused on local content offerings,” it said.