SINGAPORE - Mainboard-listed Olam International has acquired the wheat milling and pasta manufacturing assets of the BUA Group in Nigeria for US$275 million (S$396.9 million).
The transaction will double Olam's wheat milling capacity and make it a leading pasta player in Nigeria, the company said in a filing with the Singapore Exchange on Monday (Jan 11).
The BUA Group, a diversified foods and infrastructure business group in Nigeria, is among the top five wheat millers in the country with wheat milling and pasta manufacturing capacities of 3,760 and 700 metric tonnes per day (TPD) respectively.
The assets to be acquired include two wheat mills and a pasta manufacturing facility in Lagos, a non-operating mill in Kano in the North of Nigeria, and a wheat mill and a pasta manufacturing plant under construction in Port Harcourt in the Southeast of Nigeria.
Olam, which is the world No 2 wheat miller by sales volume, will see its wheat milling capacity in the country increase from its current 2,380 TPD to 6,140 TPD once the facilities in Port Harcourt are completed in June 2016. Olam's total wheat milling capacity in Sub-Saharan Africa will double to reach approximately 7,640 TPD.
Said managing director & CEO of Olam Grains, K C Suresh: "Nigeria is a high growth milling market with volumes expected to reach five million metric tonnes in 2020 as population growth and urbanisation increase the demand for wheat-based products. The size of the Nigerian flour market is in excess of US$2.0 billion, growing at 3.5 per cent per year while the pasta market is growing at the rate of 8 per cent per year.
Olam has identified grains as one of the six prioritised platforms for investment and accelerated growth. It said the wheat milling operations in Sub-Saharan Africa has been a growth engine for the platform since 2010 when it acquired Crown Flour Mills (CFM) in Nigeria. Since then, Olam has expanded its capacity at CFM in 2013 and set up milling operations in Ghana, Senegal and Cameroon.