Olam acquires Nigerian flour mill for US$107.6 million

Supply chain manager Olam International announced its acquisition of Crown Flour Mills Limited for a consideration of US$107.6 million.

Olam will acquire 99.5% of the mill company’s wheat milling and noodle manufacturing facilities along with accompanying additional assets. This also includes 99.5% equity ownership in Crown Flour Mills Limited for an enterprise value of US$87.6 million and an equity value of US$38.6 million and an additional sum of US$20 million towards surplus assets in the business, which include buildings, warehouses, other logistics assets and accompanying
additional land for potential agro-processing activities.

CFM is amongst the three largest wheat millers in Nigeria, supplying bread flour,
noodle flour and semolina to both industrial users and wholesalers in the country.
Its wheat milling operation includes two port-based milling facilities in Lagos and Warri and can mill 1,550 metric tonnes of wheat per day. In addition, it has its own noodle manufacturing facility, a fast-growing business under the Cherie brand franchise.

Olam’s President for the Grains business K C Suresh said that Nigeria, as one of the largest wheat milling facilities in the world is Olam’s priority anchor market to build a configuration of port-based wheat milling facilities in Africa.

CFM’s Managing Director and Chief Executive Officer Chief Maan Lababidi
remarked: “Olam has a strong and long standing presence in Nigeria and we are
confident that Olam, with an extensive distribution network for staples and packaged foods across West Africa, is capable of taking the wheat milling business to its full potential locally and regionally.”

Olam intends to scale the business to its full potential by leveraging its origination and global wheat sourcing and freight management capabilities. Olam, with its strong footprint in the distribution of food staples such as rice, sugar, dairy and packaged foods, is likely to extract significant synergies arising from customer, channel and cost sharing.

Olam also plans to invest an additional US$5.5 million to expand CFM’s wheat handling and milling capacity.

The acquisition is subject to customary closing conditions and is expected to be
completed by end-January 2010.