April 24 (Lagos) - Shares of Olam International are up by more than 2.5% to SGD 1.97 per unit at the Singapore Stock Exchange this afternoon after the Company announced plans to acquire Dangote Flour Mills Plc (
DANGFLOUR ).
The deal is valued by N 130 billion while the Company's current market cap is less than N 70 billion. The Company does have significant debt on its balance sheet.
The debt ratio is approaching 200% based on 2018 FY results.
Price to book ratio is 1.54 suggesting that the stock is overvalued at these levels. This is because the Company posted a loss for 2018 on lower revenue and sharply lower Gross profit.
This was a business that Dangore Group sold to Tiger Brands of South Africa many years back. Tiger Brands sold it back to Dangote Group and exited Nigeria after suffering huge losses. Afterwards Dangote Group sold the Noodles business to Indomie noodles maker and there were rumors that they were looking to exit the business entirely once again.
Olam International is one of the biggest commodities trading Companies in the world. It started from Nigeria in 1995 and grew into a global giant with shareholders that include
Temasek Holdings 53%,
Mitsubishi Corporation 17.4%,
Chanrai Group - 7%,
Olam Management - 6.3% and
General Public 15.6% according to Olam website.
reporting for easykobo.com on Tuesday, April 24 2019 from Lagos, Nigeria