By Festus Okoromadu
Flour Mills of Nigeria (FMN) Plc, Friday notified the Nigerian Stock Exchange (NSE) of discussions and negotiations with the board of one of its subsidiaries, Niger Flour Mills Limited with regards to merging their respective businesses. Currently, FMN Plc holds 99.97 per cent equity in Niger Flour Mills. The proposed merger according to the notification sent to the Exchange will facilitate the consolidation of the operations of both individual entities and processes into a single enlarged entity.
Part of the document obtained by ‘thepost’ from the Exchange reads, “The board of Flour Mills believes that the enlarged entity will consolidate Flour Mills’ leading position in the flour milling industry, accessing positive economies of scale and realizing significant synergies through enhanced operational and a unified product delivery platform, and thereby providing immense benefits to the shareholders and customers of Flour Mills.
Accordingly, the purposed merger is expected to create a more efficient company, positioned to create potential savings through the optimization of overhead cost, particularly administrative cost relating to maintaining two distinctive entities.The proposed scheme of merger will be undertaken pursuit to Part XII of the Investment and Securities Act No, 29 of 2007. The scheme according to the notice, will be achieved by the transfer of all of the assets, liabilities and undertakings of Niger Mills to Flour Mills or alternatively a cash consideration in lieu of the allotment of the said Flour Mills shares be made to the minority shareholders. The scheme, upon becoming effective, all shares held in Niger Mills will be cancelled.
Meanwhile, a court ordered meeting has been scheduled to hold February 20, 2013 at Eko Hotel and Suite in Lagos in a bid to ratify the merger.