Dangote to offset his flour mills over Nigeria’s bad economy.
Following the unfriendly business environment in Nigeria and several losses recorded as a result of Apapa gridlock and smuggling, Aliko Dangote has resolved to sell a business unit of his conglomerate, Dangote Flour Mills Plc, to Olam International at a value worth N130 billion.
The equivalent of the money involved, according to the industry watchers, is $361,11 million dollars.
The Forbes African richest man is selling another business unit two years after he sold his Dangote Noodle plant to De-United Foods Industries for N3.75billion.
From all indications, Dangote may likely accept the offer because the acquisition will form part of the company’s strategy to strengthen its portfolio by investing in proven businesses where it has consistently performed and gained market leading positions.
Thabo Mabe, a director at Dangote Flours, while reacting to the acquisition said the deal is a welcome development for Dangote, as Olam International has indicated interest to acquire all the outstanding and issued shares of the flours company that are currently owned by Olam through its subsidiary, Crown Flour Mills Limited.
“The total consideration offered by Olam and being considered by the Board of Dangote Flour Mills for the entire 5 billion issued shares of the company is N130 billion.
“This consideration will be adjusted for networking capital and net debt as of 31 March 2019 or any other later date that may be agreed by Olam and the Board of Dangote Flour Mills to arrive at the final price payable to equity shareholders.
“The final price to be paid to the shareholders of the company would be adjusted downwards to exclude shares held by Olam through its subsidiary part,” Thabo stated
In the last few years, Dangote Flour Mills has been recording loss as a result of the bad economy.
The business unit in 2017 tried all possible means to remain afloat in the economy but the continuous losses affected the brand and fell back in 2018.
Another factor leading to the decision to offset the Dangote Flour Mills by the management is the daunting Apapa gridlock and smuggling that have been hindering its growth.
Dangote Flour Mills has its presence in Ikorodu, Apapa, Kano, Calaba, Ilorin and offers value added products such as Dangote Sugar, pasta and flour.