Sanyo Foods will invest $20 million in cash, for a 25.5% equity interest through issue of new shares by the JV that will house Olam’s instant noodles assets and business in Nigeria. Olam will hold the balance majority ownership of 74.5% in the JV with management control. The consideration has been arrived between both parties on a willing-buyer willing-seller basis. The transaction is subject to customary closing conditions.
Founded in 1953, Sanyo Foods is a global leader and Japan’s third largest player in the instant noodles business. It has established a leadership presence in China, Vietnam, Russia and North America through strategic partnerships. In the past, Sanyo Foods has also acquired equity stakes in Tingyi Holdings in 1999 and King Lion of Russia in 2011 to catalyze the growth of these companies in their respective home markets. Tingyi Holdings is currently the market leader in China with 24 production facilities across the country.
Olam’s instant noodles business, under the “Cherie” brand, was part of Crown Flour Mills’ wheat milling business which Olam acquired in January 2010. Olam is now amongst the top 4 players in instant noodles in Nigeria with an extensive distribution network and marketing infrastructure across the country and a turnover of $24 million in FY2012.
The companies noted that the JV will draw on the strengths of both partners with Olam’s expanding marketing and distribution network across Nigeria and its pan-Africa presence as well as Sanyo Foods’ world-class and innovative technology in the development and manufacturing of instant noodle products, and new market development experience.
“We are extremely excited about the next phase of growth for our instant noodles business in Nigeria and across sub-Saharan Africa,” Olam’s President and Global Head of the Packaged Foods Business, Ramanarayanan Mahadevan said. “Our partnership with Sanyo Foods would enable us grow the instant noodles business at a much faster rate with new products and new flavours to delight our consumers.”
Sanyo Foods’ President Junichiro Ida concurred: “Sanyo Foods celebrates its 60th anniversary this year. In this memorable year, we are thrilled to announce the proposed joint venture company and to form a strategic alliance with Olam, to set foot in the sub-Saharan Africa market. We believe that enormous synergy can be generated by matching Sanyo Foods’ product development and technical capability with Olam’s existing production facility and strong distribution network.”