Dufil Nigeria Limited, the maker of Indomie Noodles and other packaged food products in Nigeria, has acquired May & Baker’s food line for ₦775m. The acquisition, which happened late last month, gives Dufil ownership right to the Mimee Noodles brand.
The acquisition process was finalised on April 26th, 2018 after all the necessary approvals were given by the companies’ Boards of Directors, their respective shareholders, and the Nigerian Stock Exchange.
Business Day reported that Dufil Nigeria Limited had undertaken the acquisition of Mimee Noodles, with hopes of meeting the growing food needs across the ECOWAS region, as well as contributing to Nigeria’s economic growth through the enhancement of the non-oil sector.
Meanwhile, May & Baker’s Head of Corporate Communications, Sandra Aduba gave more insight into the development, stating that it was a 100% acquisition of the company’s food line; representing about 10% of total balance sheet size.
The Noodles industry is a red ocean and a loss contributing unit for us, hence the decision to sell. The board and shareholders approved the sale at an Extraordinary General Meeting (EGM) held on 23rd November 2017. -Sandra Aduba
She further stated that the company has overtime ran at a loss due to the poor revenue realised from the recently divested food arm. May & Baker earned about ₦1.2 billion from the food line according to its financial report for the year ended December 31st, 2017. This is about ₦520 million more than the amount Dufil eventually offered to acquire it.
Would May & Baker plough back the money or pay a special dividend?
According to Aduba, the divestment would avail May & Baker the opportunity to access the much-needed capital towards the actualisation of its refocused business model. In other words, the money would be ploughed back into the business to enable them to deliver “excellent returns for our shareholders and good value for all stakeholders.” She further disclosed that the company has plans of raising more capital through the stock market later this year.
May & Baker was founded in 1944 and it is one of Nigeria’s foremost companies and the first in the pharmaceutical industry. In 2006, the company ventured into the fast moving consumer goods (FMCG) sector with the construction of a multi-billion naira food-processing plant. The company is listed on the Nigerian Stock Exchange, and its shares are currently trading at ₦2.65.
Dufil Nigeria Limited, on the other hand, was incorporated in 1993. It is vested in the manufacturing of food, including Indomie Noodles (which controls about 50% of the noodles market in Nigeria), as well as vegetable oil.