FBN debt: Flour Mills acquires Otudeko’s shares in Honeywell for N80bn

Flour Mills of Nigeria Plc (FMN) has acquired the 71.69 per cent stake of billionaire Oba Otudeko in the Honeywell Flour Mills Plc (HFMP), a portfolio company of Honeywell Group Ltd. (HGL).

The transaction is valued N80 billion.

Also, FMN has entered into agreement with the First Bank Holdings Company to acquire its 5.06 per cent equity stake in Honeywell Flour Mills.

Industry sources told The Star that the transaction is hinged on the debt crisis in the First Bank of Nigeria where Otudeko held a major stake.

Otudeko is said to be owing the bank billions of naira.

Already, the Central Bank of Nigeria (CBN) has given the billionaire a timeline to pay his humongous debt to the bank.

One of the sources told The Star that First Bank’s investment in Otudeko’s Honeywell Flour Mills was influenced by the businessman.

Meanwhile, FMN and HFM have signed an agreement for the business deal, both companies said this in a statement posted on the website of the Nigerian Exchange Ltd. (NGX) on Monday.

“FMN and HGL today announced that they have signed an agreement 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 N80 billion, HGL will dispose of a 71.69 per cent stake in HFMP to FMN.

“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,” said the statement.

It said a combination of FMN and HFMP would bring together two trusted brands, creating a food business better positioned to benefit the growing Nigerian population and leverage opportunities stemming from the African Continental Free Trade Area (AfCFTA).

The statement added that the final equity price per share payable would be determined based on HFMP’s adjusted net debt and net working capital at the date of completion.

According to the statement, the proposed combination is subject to approval by the appropriate regulators.

Commenting on the transaction, Managing Director, Honeywell Group Ltd., Mr. Obafemi Otudeko, said the announcement was in line with the evolution of Honeywell Group.

“Today’s announcement is in line with the evolution of Honeywell Group and our vision of creating value that transcends generations.

“For over two decades, we have supported Honeywell Flour Mills to build a strong business with a production capacity of 835,000 metric tonnes of food per annum.

“Following the transaction, Honeywell Group will be strongly positioned to consolidate and expand its investment activities, including as a partner of choice for investors in key growth sectors,” said Otudeko.

Mr. Omoboyede Olusanya, Group Managing Director, Flour Mills of Nigeria, said the proposed transaction was aligned with the vision to be a national champion for Nigeria.

“We believe that this will create an opportunity to combine the unique talents of two robust businesses.

“As a result, we will have a better-rounded and more comprehensive skill set available to us as a combined diversified food business, thus enabling us to better serve our consumers, customers and other stakeholders, whilst providing employees with access to broader opportunities,” Olusanya said.

The statement further said the complementary transaction combined FMN’s market-leading offerings that included grain-based foods, sugar, starch, oil and breakfast cereals with HFMP’s market leading diverse and differentiated range of carbohydrate products.

It added that 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 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 as it will have more brands and categories, and a larger and more geographically diverse footprint.

“Customers across the nation will benefit from access to a wider product range and a robust pan-Nigerian distribution network, accessing greater number of points of sale supported by enhanced customer-focused sales teams and redistribution capabilities.

“The combination will also serve as a catalyst for an even stronger stream of innovation that is focused on local content offerings,” it said.