Singapore-based commodity trader Olam International on Tuesday said it will buy Nigeria’s Dangote Flour Mills for an enterprise value of 130 billion naira ($424.9 million).
The deal will be funded by internal cash resources and existing borrowing, Olam added, as it looks to expand in West Africa as part of a rejig of its portfolio.
The acquisition means Olam is going back to its roots. The company was founded in Nigeria as an exporter of cashew nuts 30 years ago, and has since grown into a global behemoth with operations in more than 60 countries and a market value of $4.5 billion.
READ: Two ladies jailed for wearing skimpy dresses in Kaduna
The deal will enable it to build on a country workforce of almost 3,000, while tapping local demand for bakery, snacks and pasta products.
“We are confident about the growth prospects in this country and this acquisition, doubling our installed capacity here, is evidence of our long-term commitment to the Nigerian economy,” K.C. Suresh, head of Olam’s grains and animal feed division, said in an emailed statement to Bloomberg.
The acquisition is also part of a strategic shift toward areas that offer the most demand, including flour milling in West Africa.
Nuts, cotton and tropical spices have also been earmarked for expansion, Olam said in January, while the company will exit commodities such as sugar and rubber.
