Olam International, the global agribusiness conglomerate has agreed to buy the wheat milling and pasta manufacturing businesses of Nigeria’s BUA Group. The deal is worth $275 million (N54.7 billion).
Olam, owned by Singapore’s Temasek, said it had acquired BUA Group’s Amber Foods Limited, owners of two wheat mills and a pasta manufacturing plant in Lagos, a non-operating mill in the northern state of Kano and a wheat manufacturing plant under construction in the southern city of Port Harcourt.
The acquisition will double Olam’s daily aggregate wheat milling capacity in Nigeria from 2,380 metric tonnes per day to 6,140 metric tonnes per day once the facilities in Port Harcourt are completed in June 2016. Olam’s total wheat milling capacity in Sub-Saharan Africa will also double to about 7,640 metric tonnes per day.
“Nigeria is a high growth milling market with volumes expected to reach five million metric tonnes in 2020 as population and urbanization increase the demand for wheat-based products,” said K. C. Suresh, the Managing Director of Olam Grains. “The size of the Nigerian flour market is in excess of $2 billion, growing at 3.5 percent per year while the pasta market is growing at the rate of 8 percent per year.”
Olam became one of the largest wheat millers in Nigeria after it completed the acquisition of Crown Flour Mills (CFM) Limited for $107.6 million in 2010. In 2013, Olam expanded CFM’s wheat milling capacity and established milling operations in the African countries of Ghana, Senegal, and Cameroon.
With acquisition of BUA Group’s wheat and pasta mills, Olam has become the second largest wheat milling and pasta manufacturing company in Nigeria, the statement said.
“We are confident about the growth prospects in Nigeria,” said Mukul Mathur, Country Manager for Olam Nigeria, “so expanding our participation here is a logical step to capitalize on the opportunity. Our value-added export business in the country puts us in a strong position to manage forex availability.”
Olam International started its global agricultural commodities trading business in Nigeria in 1989 and has invested over $1 billion in the country’s agriculture sector in the last ten years.