Olam International has acquired wheat milling firm Amber Foods for US$275 million (S$394.4 million), it announced yesterday.
Amber Foods owns the wheat milling and pasta manufacturing assets of BUA Group in Nigeria through its wholly owned subsidiary Quintessential Foods Nigeria. The BUA Group is among the top five wheat millers in Nigeria.
The acquisition has doubled Olam's wheat milling capacity.
Olam told the Singapore Exchange yesterday that the assets acquired in Nigeria include two wheat mills and a pasta manufacturing facility in Lagos, a non-operating mill in Kano and a wheat mill and a pasta manufacturing plant that is still under construction in Port Harcourt.
"The acquisition will strengthen Olam's position as the No. 2 wheat miller by sales volume and make it a leading pasta player in Nigeria," the firm said in a statement.
The deal, to be financed through debt and internal funds, is expected to add to earnings from the first year after consolidation, Olam said.
The acquisition will boost Olam's total wheat milling capacity in Nigeria from 2,380 tonnes a day to 6,140 once the plant in Port Harcourt is completed in June. This will double its total wheat milling capacity in Sub-Saharan Africa to about 7,640 tonnes a day, Olam added.
"Nigeria is a high-growth milling market with volumes expected to reach five million tonnes in 2020 as population growth and urbanisation increase the demand for wheat-based products," said Mr K.C. Suresh, managing director and chief executive of Olam Grains.
The Nigerian flour market is worth around US$2 billion a year and is growing at 3.5 per cent annually while the pasta market is growing at 8 per cent a year, Mr Suresh added.
The grains business is a priority area of investment for Olam. The wheat milling operations in Sub-Saharan Africa have been a growth engine for the business since 2010, when it acquired Crown Flour Mills in Nigeria. Since then, Olam has expanded its capacity at Crown Flour Mills and set up milling operations in Ghana, Senegal and Cameroon.