By Chijioke Ohuocha
ABUJA (Reuters) -Flour Mills of Nigeria has completed its acquisition of rival Honeywell Flour Mills after regulators approved the deal, the company said on Tuesday.
Flour Mills of Nigeria said in November it would acquire a 77% stake in Honeywell Flour Mills with its own cash and some debt.
The deal is valued at 80 billion naira ($192.91 million), including debt.
The pasta maker has said the acquisition was necessary to defend its market share, broaden it product range and build scale especially as Nigeria joins a continental free trade zone with an anticipated increase in competition.
The food industry has been consolidating.
In 2019, Singapore-based commodity trader Olam International agreed to buy Nigeria’s Dangote Flour Mills for an enterprise value of 130 billion naira ($313.13 million).
Flour Mills’ acquisition comes after the food company’s sales crossed the 1 trillion naira ($2.41 billion) mark for the first time in the 12 months to March 2022.
The company said the Russia and Ukraine war continued to drive up production costs as commodity prices and input costs rise.
“We are aware that there are headwinds with what we are seeing in Russia and Ukraine, but we are confident that we would continue to manage efficiently,” CEO Boye Olusanya told an analyst call.
Flour Mills, which generates the bulk of its sales from food and agro-business, said the Honeywell transaction was priced at 4.20 naira per share, higher than Honeywell’s share price of 3.20 naira on Tuesday.
Honeywell will retain its listing on the Nigerian stock exchange after the deal.
Shares of Flour Mills, which plans to expand its reach in Nigeria and also cash in on demand for wheat-based products in the region, fell 0.98% to 35.35 naira.
($1 = 414.70 naira)
(Reporting by Chijioke Ohuocha.
Editing by Jane Merriman)
