Both companies said this in a statement posted on the
website of the Nigerian Exchange Ltd. (NGX) on Monday.
“FMN and HGL today announced that they have 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 off a 71.69 per cent stake in HFMP to FMN.
“The proposed transaction will combine two businesses with
shared goals and create a more resilient national champion in the Nigerian
foods industry, ensuring long-term job creation and preservation,” said the
statement.
It said a combination of FMN and HFMP would bring together
two trusted brands, creating a food business better positioned to benefit the
growing Nigerian population and leverage opportunities stemming from the
African Continental Free Trade Area (AfCFTA).
The statement added that the final equity price per share
payable would be determined based on HFMP’s adjusted net debt and net working
capital at the date of completion.
According to the statement, the proposed combination is
subject to approval by the appropriate regulators.
Commenting on the transaction, Managing Director, Honeywell
Group Ltd., Mr Obafemi Otudeko, said the announcement was in line with the
evolution of Honeywell Group.
“Today’s announcement is in line with the evolution of
Honeywell Group and our vision of creating value that transcends generations.
“For over two decades, we 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,” said Otudeko.
Mr Omoboyede Olusanya, Group Managing Director, Flour Mills
of Nigeria, said the proposed transaction was aligned with the vision to be 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,”
Olusanya said.
The statement further said the complementary transaction
combined FMN’s market-leading offerings that included grain-based foods, sugar,
starch, oil, and breakfast cereals with HFMP’s market-leading diverse and
differentiated range of carbohydrate products.
It added 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 a
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,” it
said.