BY NKIRUKA NNOROM
Flour Mills Plc has announced its intention to merge its business with Niger Mills limited.
Niger Mills produces a wide range of goods, including flour, pasta, cement, fertilizer, bags and other packaging materials. In Cross River, Niger Mills’ main focus is on producing high quality wheatflour.
Flour Mills already holds 99.97 percent equity stake in Niger Mills. The scheme of merger will be achieved by the transfer of liabilities and undertakings of Niger Mills to Flour Mills, while the entire issued share capital of Niger Mills will be cancelled.
In a notice filed with the Nigerian Stock Exchange, NSE, Flour Mills explained that the boards of both companies have been in discussion and negotiations with regard to merging their respective businesses.
The company noted that the proposed scheme of merger would be undertaken pursuant to part XII of the investment and securities Act No. 29 of 2007.
It further stated that in exchange for Niger Mills’ liabilities transferred to Flour MIlls, ordinary shares of Flour Mills would be issued to the minority shareholders of Niger mills or alternatively a cash consideration in lieu of the allotment of the said Flour Mills shares to the minority.
According to statement, the proposed merger would facilitate the consolidation of the companies’ operations and processes into a single enlarged entity, while positioning them to create particularly administrative costs relating to maintaining two distinctive entities.
“The board of Flour Mills believes that the enlarged entity will consolidate accessing positive economies of scale and realizing significant synergies through enhanced operational and administrative efficiency, thereby providing immense benefits to the shareholders and customers of Flour Mills.
It would be recalled that Flour Mills had recently secured approval-in-principle from the Securities and Exchange Commission, SEC, for a proposed business combination with Nigerian Bag Manufacturing Company Plc (Bagco) and its subsidiaries – Northern Bag Manufacturing Company Limited and Bagco Morpack Nigeria Limited.
The companies had said that they wanted to undertake the merger in order to streamline their operations and reduce administrative costs.
Other reasons adduced by the companies include the need to improve operating efficiency and capture the full synergies arising from the merger, which, in turn will result in a significant enhancement of shareholders’ value.
According to Flour Mills, the acquisition confirmed the company’s unalloyed support for the Federal Government’s Agricultural Transformation Agenda having already commenced major agro-allied investments in the areas of rice cultivation and milling; Sugar growing, milling and refining; maize and Soya beans growing; palm oil cultivation and refining; and production of animal feeds.