Flour Mills of Nigeria (FMN) has acquired Honeywell Flour Mills PLC (HFMP).
FMN which disclosed the development in a statement on Monday, said it signed an agreement with Honeywell Group Limited (HGL), owners of Honeywell Flour Mills for the acquisition.
The statement said Honeywell Group Limited agreed to sell a 71.69% stake in Honeywell Flour Mills to Flourmills of Nigeria.
“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 NGN80 billion, HGL will dispose of a 71.69% stake in HFMP to FMN,” the statement said.
“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.”
Enterprise Value includes the debt of the company. Honeywell Flour Mills currently has a market value of N29 billion
FMN said the transaction will create a stronger company in the food industry. It stated,
“The country and its food security agenda will benefit from both companies’ focus on developing Nigeria’s industrial capability, its agricultural value chain and specifically backward integration of the food industry.”
Honeywell currently has a debt balance of N78.5 billion and a cash balance of N27.3 billion as of the latest results. Flour Mills is also debt-laden with about N142.8 billion in debt and N52.6 billion in cash. It is unclear how Flour Mills paid for the acquisition. Our initial prognosis suggests this transaction is funded from debt.
Among those are a N10.4 billion loan from First Bank, N2.3 billion from Bank of Industry, N6.2 billion from Fidelity Bank, and N3.5 billion from Polaris Bank. This is based on its last audited accounts for the period ended March 2021. Flour Mills on the other hand owes about N50 billion in several intervention loans to Bank of Industry and the CBN. The company also has another N68.6 billion in commercial papers and bonds.