Nigeria’s Palm Oil Producer Presco Poised To Buy Another Firm After Snapping Up Ghana’s GOPDC
Presco Plc, the largest palm oil producer in Nigeria, is on course to buy Saro Oil Palm Limited (SOP) after its $124.93 million acquisition of Ghana Oil Palm Development Company (GOPDC).
The company said the proposed purchase of SOP, an integrated agro-industrial company specialised in the cultivation of oil palm, extraction of crude palm oil and palm kernel oil, will cost $46.71 million. SOP is a subsidiary of Société d’Investissement pour l’Agriculture Tropicale (SIAT SA) a key shareholder in Presco.
It said the cost of acquiring GOPDC was settled in phases, with an initial payment of $64.96 million and the balance of $59.96 million to be settled with the proceeds from a proposed rights issue. GOPDC currently has a capacity to produce over 35,000 tonnes of palm oil and palm kernel oil per annum and has a storage capacity of 21,000 tonnes, according to a statement.
“Presco has made an offer to SIAT SA to acquire 100% ordinary shares of SOP,” it said.
The company said the transactions will position it as “a large African conglomerate with an expanded customer base and increased market share within Africa”.
“Presco’s plantation size is expected to increase by 37% from c.43,547 hectares to c.59,760 hectares, further solidifying its position as a leading oil palm producer in Africa,” it added.
Presco currently generates almost all of its revenue in local currency, while GOPDC generates about 41% of its revenue from export sales primarily in US dollars and euros, according to the company.
It said the currency diversification would mitigate the impact of adverse exchange rate movements on the company’s financial performance.
“The transactions will strengthen Presco’s competitive position and drive productivity within the company through cost savings from streamlining its processes; optimising resource utilisation and positioning more effectively to meet the market demands as a consolidated oil palm business,” it said.
Presco said that to support the execution of its strategic initiatives and ensure a strong financial foundation, its board has proposed raising up to N250 billion through a rights issue.
“The proceeds from the rights issue will be deployed towards the refinancing of existing debt obligations, settlement of the outstanding consideration for the 100% acquisition of GOPDC, settlement of the consideration for the proposed acquisition of SOP and creation of a financial buffer to support business expansion,” it said.
