Singapore-listed international agricultural products trader Olam said Monday it has acquired Amber Foods Ltd from Nigeria's BUA Group, a move that will more than double its wheat milling capacity in the West African country.
The $275 million acquisition, through its 100% owned subsidiary Quintessential Foods Nigeria Ltd, will see Olam take over BUA's wheat milling and pasta manufacturing assets in Nigeria, which comprises two wheat mills and a pasta manufacturing facility in Lagos, a non-operating mill in Kano in the north of Nigeria, as well as a wheat mill and a pasta manufacturing plant under construction in Port Harcourt in southeastern Nigeria.
Once the facilities in Port Harcourt are completed in June 2016, Olam's total wheat milling capacity in the country will increase from its current 2,380 mt/day to 6,140 mt/day, the company said in a statement issued Monday.
This will also double Olam's total wheat milling capacity in Sub-Saharan Africa to approximately 7,640 mt/day, the statement said.
The acquisition will strengthen Olam's position as the number two wheat miller by sales volume, propelling it as the leading pasta player in Nigeria.
"Nigeria is a high growth milling market with volumes expected to reach 5 million mt in 2020 as population growth and urbanization increase the demand for wheat-based products. The size of the Nigerian flour market is in excess of $2 billion, growing at 3.5% per year while the pasta market is growing at the rate of 8% per year," said Managing Director and CEO of Olam Grains, K.C. Suresh.
This is the second time Olam has chosen Nigeria as its strategic expansion location.
Last Thursday, the company announced it signed a consulting pact with French animal feed producer Invivo, under which the companies will share expertise to accelerate their entry in the Nigerian animal feed sector.
Nigeria was chosen due to its strong growth outlook and demographics, where the commercial feed market is expected to have a compound annual growth rate of more than 10% over the next five years.
The $275 million acquisition, through its 100% owned subsidiary Quintessential Foods Nigeria Ltd, will see Olam take over BUA's wheat milling and pasta manufacturing assets in Nigeria, which comprises two wheat mills and a pasta manufacturing facility in Lagos, a non-operating mill in Kano in the north of Nigeria, as well as a wheat mill and a pasta manufacturing plant under construction in Port Harcourt in southeastern Nigeria.
Once the facilities in Port Harcourt are completed in June 2016, Olam's total wheat milling capacity in the country will increase from its current 2,380 mt/day to 6,140 mt/day, the company said in a statement issued Monday.
This will also double Olam's total wheat milling capacity in Sub-Saharan Africa to approximately 7,640 mt/day, the statement said.
The acquisition will strengthen Olam's position as the number two wheat miller by sales volume, propelling it as the leading pasta player in Nigeria.
"Nigeria is a high growth milling market with volumes expected to reach 5 million mt in 2020 as population growth and urbanization increase the demand for wheat-based products. The size of the Nigerian flour market is in excess of $2 billion, growing at 3.5% per year while the pasta market is growing at the rate of 8% per year," said Managing Director and CEO of Olam Grains, K.C. Suresh.
This is the second time Olam has chosen Nigeria as its strategic expansion location.
Last Thursday, the company announced it signed a consulting pact with French animal feed producer Invivo, under which the companies will share expertise to accelerate their entry in the Nigerian animal feed sector.
Nigeria was chosen due to its strong growth outlook and demographics, where the commercial feed market is expected to have a compound annual growth rate of more than 10% over the next five years.
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