Olam Group Limited · SGX:VC2
Olam — Olam International — Merger or Acquisition (January 2016)
24 slides from Olam's merger presentation, Jan 11, 2016
Slide 1: Acquisition of Wheat Milling and Pasta Manufacturing Assets, Nigeria
Acquisition of Wheat Milling and Pasta Manufacturing Assets, Nigeria Analysts/Media Conference Call January 11, 2016 | Singapore Olam International Limited
Slide 2: Cautionary note on forward-looking statements
Cautionary note on forward-looking statements This presentation should be read in conjunction with Olam International Limited’s news release lodged on SGXNET on January 11, 2016. It may contain statements regarding the business of Olam International Limited and its subsidiaries (‘Group’) that are of
Slide 3: Presenters
Presenters A. Shekhar, Executive Director, Finance & Business Development K C Suresh, Managing Director & Global Head, Grains Saurabh Mehra, Senior Vice President, Head of Milling 3
Slide 4: Agenda
Agenda Transaction overview Our current participation in wheat milling Nigeria’s milling industry Assets overview Benefits of combined milling business Financial impact Key takeaways 4
Slide 5: Transaction overview
Transaction overview A Olam un a call
Slide 6: Highlights
Highlights Olam to acquire the wheat milling and pasta manufacturing assets of the BUA Group in Nigeria for a total enterprise value of US$275.0 million BUA Group is among the top 5 largest wheat millers in the country with flour and pasta making capacities of 3,760 and 700 metric tonnes per day (TP
Slide 7: Investment rationale
Investment rationale Consistent with Olam’s strategy of doing fewer but larger acquisitions that can have a higher impact on earnings and returns Consistent with our strategy to selectively invest in prioritised platforms; Grains being one of the identified platforms for growth Provides an opportuni
Slide 8: Our current participation in wheat milling
Our current participation in wheat milling Onion harvesting in USA
Slide 9: Selection criteria
Selection criteria Market attractiveness • Political stability • Existing flour market size • Potential for growth Industry protection • Flour import position • Import tariffs Margin attractiveness • Milling margin • Projected capacity imbalance Winnability • Olam’s presence • Existing infrastructur
Slide 10: Selective participation in milling in Sub-Saharan Africa
Selective participation in milling in Sub- Saharan Africa Based on our selection criteria, we entered the following geographies: Nigeria • Nigeria: Acquired Crown Flour Mills (Jan 2010) • Ghana: Greenfield wheat mill of 500 TPD (Apr 2011) Ghana • Senegal: Greenfield wheat mill of 500 TPD (Jun 2014)
Slide 11: Nigeria: Crown Flour Mills (CFM)
Nigeria: Crown Flour Mills (CFM) Acquired in Jan 2010, CFM increased capacity in 2013 to 2,380 TPD Asset details: • Lagos • Milling capacity: 1,580 TPD • Storage capacity: 48,000 MT • Warri • Milling capacity: 800 TPD • Storage capacity: 20,000 MT • Product range • Bread flour • Noodle flour • Biscu
Slide 12: Nigeria's milling industry
Nigeria’s milling industry 12
Slide 13: Industry dynamics
Industry dynamics Large, growing market Industry structure concentrated with 5 key players with high barriers to entry Local wheat milling industry enhanced by favourable regulatory regime where import of wheat flour attracts 100% duty and pasta import is banned Port access and a nation-wide sales a
Slide 14: Large import, high growth market
Large import, high growth market Population of 160 million • Over 50% urban • Median age of just 18 years Rate of urbanisation of 3.8%, leading to demand growth for bread, pasta, noodles and biscuits Largest importer of wheat in Sub-Saharan Africa • 4.2m MT p.a. • Addressable flour/semolina market o
Slide 15: Assets overview
Assets overview 15
Slide 16: Assets footprint
Assets footprint Assets in Port Harcourt, to be commissioned in June 2016, will give us access to the Southeast region of Nigeria – a 500,000 MT p.a. market we are not serving yet. 16
Slide 17: Asset details
Asset details Tin Can, Lagos Beachland, Kano Port Harcourt Lagos (not in (expected operation) commissioning in Jun 2016) Milling 1,700 360 500 1,200 Capacity (TPD) Pasta Capacity - 320 - 380 (TPD) Storage 45,000 4,000 10,000 46,500 Capacity (MT) Products Bread flour Pasta Bread flour Noodle flour No
Slide 18: Benefits of combined milling business
Benefits of combined milling business Irrigation at our coffee farms in Zambia
Slide 19: Sources of synergies
Sources of synergies Asset utilisation: Increase days of operation for flour and pasta in acquired mills to CFM’s standards to extract greater efficiency Wheat gristing: Leverage Olam’s global network to source wheat from different origins and generate efficient blends Freight and demurrage: Reduce
Slide 20: Financial impact
Financial impact Irrigation at our coffee farms in Zambia 20
Slide 21: Financial impact
Financial impact Price consideration of US$275.0 million represents a small premium to replacement cost To be funded through debt and internal accruals, the acquisition is expected to be earnings accretive from Year 1 post consolidation Acquired business is expected to generate a return in EBITDA/In
Slide 22: Key takeaways
Key takeaways 22
Slide 23: Key takeaways
Key takeaways Acquisition of BUA Group’s wheat milling and pasta assets (among top 5 in Nigeria) for enterprise value of US$275.0 million Accelerates growth in our Grains platform by scaling up Africa wheat milling Achieves Grains’ strategic objective for selective participation in wheat milling in
Slide 24: Thank You.
Thank You.
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