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Flour Mills Nigeria Receives SEC Approval for Bagco Merger

Flour Mills of Nigeria Plc, the country’s biggest miller by market value, has won “approval in principle” from the local Securities and Exchange Commission to buy Nigerian Bag Manufacturing Co, or Bagco.

The company will recommend to its shareholders an offer of 25 Bagco shares in exchange for one share of Flour Mills, the miller said in a statement published today on the website of the Nigerian Stock Exchange.

Alternatively, it will propose a cash consideration of 2.75 naira (2 cents) for each Bagco share, a 39 percent premium to Bagco’s closing share price on 16 Nov., according to the statement.

Flour Mills gained 4.7 percent to 66.25 naira, taking its rise this year to 1.2 percent, while Bagco gained 7 percent to 2.26 naira, taking its gain this year to 33 percent, compared with a gain of 27 percent in the Nigerian Stock Exchange All-Share Index.

The proposals are subject to approval by regulatory authorities as well as by the shareholders of both companies, according to the statement.

“This will ease management decisions with regards to the operations,” of Bagco, Pabina Yinkere, head of research at Lagos-based Vetiva Capital Management Ltd., said by phone. Bagco supplies bags used by Flour Mills for its products, which include cement, flour, and sugar from next month, when it starts production at its 750,000-metric ton sugar refinery in Lagos.

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