By Chinwendu Obienyi
Flour Mills of Nigeria Plc (FMN) and Honeywell Group Limited on Monday signed an agreement for the proposed combination of FMN through its affiliates and Honeywell Flour Mills Plc (HFMP), a portfolio company of HGL, at a total enterprise value of N80 billion, HGL will dispose of a 71.69 per cent stake in HFMP to FMN.
The proposed transaction will see the two companies combine their businesses with shared goals and create a more resilient national champion in the Nigerian foods industry, ensuring long-term job creation and preservation.
Under the proposed transaction which is subject to approval from the appropriate regulators, final equity price per share payable will be determined based on HFMP’s adjusted net debt and net working capital at the date of completion.
Speaking on the transaction, the Managing Director, Honeywell Group Limited, Obafemi Otudeko, said that the
announcement is in line with the evolution of Honeywell Group and its vision of creating value that transcends generations.
He noted that for over two decades, the group have supported Honeywell Flour Mills to build a strong business with a production capacity of 835,000 metric tonnes of food per annum.
“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.”, He said.
Omoboyede Olusanya, Group Managing Director of Flour Mills of Nigeria, said: “The proposed transaction is aligned with our vision not only to be an industry leader but a national champion for Nigeria. We believe that this will create an opportunity to combine the unique talents of two robust businesses.
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.”
The complementary transaction combines FMN’s market-leading offerings that include grain-based foods, sugar, starches, oils, spreads and breakfast cereals with HFMP’s market leading diverse and differentiated range of carbohydrate products.
The firm explained that stakeholders would benefit from the more than 85-year combined track record of FMN and HFMP and their shared goal of making affordable and nutritious food available to Nigeria’s population.
The scale of the transaction provides employees of the consolidated company with more career development opportunities in a larger organisation, 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 across the nation 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 will also 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.
HFMP’s listing will be retained for the foreseeable future. Minority shareholders of HFMP will be treated fairly and in line with capital market regulation. Further information will be provided within the required channels and timeframes.