I expect Dangote Group to exit many sectors as a future of refinery & petrochemicals super-high growth empire is built. If you look at the business history of Aliko Dangote, he has pursued one playbook: upstream accumulation of capabilities. When crowd emerges in a sector, he exits. So, that Olam, the commodity trader, is possibly going to swallow Dangote Flour Mills, to boost its wheat market in Nigeria, is just the beginning. Since 1979, Dangote has climbed the business ladder by moving from downstream to upstream. And whenever there is huge concentration in a sector, he leaves. The refinery business will be the ultimate destination for that conglomerate.
Olam has made an offer of N130 billion to acquire all shares of Dangote Flour Mills that it doesn’t already own through its subsidiary, Crown Flour Mills.
In a notice sent to the Nigerian Stock Exchange on Tuesday, the board of Dangote Flour Mills said the money being offered will cover all its five billion issued shares.
“The consideration represents the enterprise value on a debt-free, cash-free basis, payable in cash at the closing of the proposed transaction.
“This consideration will be adjusted for the net-working capital and net debt as of 31 March 2019, or any other later date that may be agreed by the board of DFM to arrive at the final price payable to equity shareholders.
“The final price to be paid to the shareholders of the company would be adjusted downwards to exclude shares held by Olam through its subsidiary.”