ABUJA, NIGERIA — Already Nigeria’s biggest flour producer and one of the bigger millers in the world, Flour Mills of Nigeria (FMN) announced on Nov. 22 that it has signed an agreement to acquire the majority equity interest in rival Honeywell Flour Mills.
The agreement enables FMN, which has an installed annual production capacity of more than 3 million tonnes (wheat equivalent), to purchase a 71% stake in Honeywell Flour Mills. Separately, Honeywell Group has agreed to sell its 5.06% interest in Honeywell Flour Mills, bringing FMN’s overall holding to 76.75%.
The proposed combination is subject to approval from the appropriate regulators.
FMN, which currently operates 17 mills in Nigeria and has well over a 50% market share, said 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. A combination of FMN and HFMP will bring together two trusted and iconic brands, creating a food business that is better positioned to benefit the growing Nigerian population and leverage opportunities stemming from the African Continental Free Trade Area.”
Omoboyede Olusanya, group managing director of FMN, said the proposed transaction is aligned with the company’s overall vision.
“We believe that this will create an opportunity to combine the unique talents of two robust businesses,” he said. “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.”
Among the advantages touted by FMN, if the transaction is approved, are:
· The scale of the transaction provides employees of the consolidated company with more career development opportunities in a larger organization, 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 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 also will serve as a catalyst for an even stronger stream of innovation that is focused on local content offerings.
· The country and its food security agenda will benefit from both companies’ focus on developing Nigeria’s industrial capability, its agricultural value chain and specifically backward integration of the food industry.
With three mills and an annual production capacity of 835,000 tonnes (wheat equivalent), Honeywell Flour Mills ranks as the fourth largest flour miller in Nigeria.Obafemi Otudeko, managing director, Honeywell Group, said the deal with FMN was “in line with the evolution of Honeywell Group and our vision of creating value that transcends generations. 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.”