The expected combination of Flour Mills Nigeria (FMN) and the flour mills unit of Honeywell Flour Mills plc (HFMP) will form a formidable entity and an unassailable market leader in the agro-allied sector in Nigeria, according to industry players and market analysts.
Last month, Flour Mills announced it had reached a deal to acquire the flour mills business of Honeywell in an N80 billion deal that will significantly enhance its market leadership.
FMN is believed to hold about 40 percent of the flour business in Nigeria and its leadership in the sector will become even more secure following the combination with Honeywell Flour, which has a production capacity of 835,000 metric tons of food per annum.
BusinessDay learns that the deal has been helped by several factors including the fact that the combination is seen as a “strategic fit” and also the leaders of the two businesses including their chairmen have known themselves for a very long time. They have mutual respect for each other.
In full year ended March 2021, the turnover for the two was N771.6 billion for Flour Mills and N109.59 billion for Honeywell Flour, and the combination will see FMN emerge as a true continental giant, amassing substantial value for shareholders and huge economic benefit for Nigeria.
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FMN, established in 1960, prides itself of being in the vanguard of feeding the nation for the past 60 years. 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 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.
Under the deal, Honeywell Group will dispose of a 71.69 percent stake in its flour business to FMN based on an enterprise value of N80 billion and subject to approval from the appropriate regulators.
The transaction will combine FMN’s offerings with Honeywell Flour’s market leading diverse and differentiated products, and 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.