Nigeria’s main oil palm firm, Presco Plc, is about to safe a 100% fairness stake within the Ghanaian Oil Palm Improvement Firm (GOPDC) for $124.9 million.
The acquisition entails buying 70,580,000 atypical shares of GOPDC at $1.77 per share.
Based on a company disclosure accessed, Presco will make an preliminary deposit of $64.962 million, with the remaining steadiness to be settled sooner or later. This strategic acquisition is anticipated to bolster Presco’s foreign money diversification efforts, as GOPDC generates about 41% of its income from export gross sales.
GOPDC, presently a subsidiary of Societe d’Investissement pour l’Agriculture Tropicale (Siat) SA, a key shareholder in Presco, operates equally to Presco. Each corporations are concerned within the cultivation of oil palm, extraction of crude palm oil and palm kernel oil, and the manufacturing of refined oil merchandise. GOPDC operates from two oil palm estates in Ghana’s Jap Area—the Kwae Property and Okumaning Property—overlaying about 21,000 hectares, of which 13,000 hectares are developed.
GOPDC’s processing amenities embody a 60 metric tonnes per hectare recent fruit palm oil mill, a 100 metric tonnes per day refinery, a 60 metric tonnes per day palm kernel mill, a fractionation plant, and a palm kernel cake pellet plant. The corporate boasts an annual manufacturing capability of 35,000 tonnes of palm oil and palm kernel oil, with a storage capability of 21,000 tonnes. It produces purple palm oil and vegetable oil below the “King’s” model and employs about 30,000 employees throughout peak harvest seasons.
For the yr ended December 31, 2023, GOPDC recorded a web income of 456.35 million Ghana Cedis (~$30.6 million), a gross revenue of 270.35 million GHc, and an working revenue of 188.18 million GHc. The corporate achieved a formidable working margin of 41.2% throughout this era. Forecasts predict GOPDC’s income to succeed in 1.2 billion GHc ($80.95 million) by 2028, with a barely diminished working margin of 39.7%.
Presco’s acquisition of GOPDC is pushed by a number of strategic causes, together with elevated market share and buyer base. The deal will develop Presco’s plantation measurement by 19%, from 43,457 hectares to 51,760 hectares. Moreover, Presco goals to attain economies of scale, strengthen its aggressive place, and optimize useful resource utilization.
The transaction is anticipated to boost the market worth of Presco Plc on the Nigerian Change (NGX), offering simpler entry to capital sooner or later. Presco is already one of the crucial worthwhile corporations on the NGX, having posted a pre-tax revenue of N50 billion in FY 2023, a 152% improve from the N19.8 billion recorded in 2022. With a web earnings of N32.9 billion, Presco achieved a return on fairness of 57.5% and supplied a dividend yield of 10%, making it a extremely enticing funding for NGX buyers.
Earlier this yr, Oak and Saffron, owned by Saroafrica Worldwide, acquired a majority stake in SIAT SA, though this takeover has not but mirrored within the firm’s financials. SIAT beforehand owned 100% fairness in GOPDC, suggesting that Presco’s acquisition of GOPDC could also be a part of a broader technique by Oak and Saffron to consolidate Presco’s itemizing on the NGX by merging it with different SIAT subsidiaries.