Presco Plc, Nigeria’s oil palm company, is set to acquire a 100 percent equity stake in the Ghanaian Oil Palm Development Company (GOPDC).
The acquisition is projected to amount to $124.9 million, with the purchase of 70,580,000 ordinary shares of GOPDC at a price of $1.77 per share.
According to a corporate disclosure by Presco on the Nigerian Exchange Group, Presco will make an initial deposit of $64.962 million, with the remaining balance to be settled in the future.
It stated that the board of directors and management team of Presco have focused on identifying the right strategies to drive sustained long-term growth and profitability of the company.
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“In line with this objective, a detailed review of the strategic opportunities available to the company was explored and the board reached a decision to propose the acquisition of a 100 percent equity stake in GOPDC.
“The acquisition consideration will be settled in phases, with an initial consideration payment of $64.96 million with the balance to be settled at a future time,” the statement said.
The directors of Presco are of the opinion that the transaction will create increased market share and customer base.
“The transaction will position Presco 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 19 percent from cumulative 43,547 hectares to cumulative 51,760 hectares.
“Based on the available financial statements, Presco generated 100 percent of its revenue in local currency in 2023, while GOPDC generated cumulative 41 percent of its revenue from export sales primarily in US Dollars and Euro,” Presco said in the statement.
It said the currency diversification mitigates the impact of adverse exchange rate movements on the company’s financial performance.
“The transaction 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.”
Presco stated that the acquisition is expected to increase the market value of the larger entity listed on the Nigerian Exchange Limited post the acquisition. “With the expected increase in market value and increased investor confidence, Presco will have improved access to capital through secondary stock offerings and bond issuances post-Transaction.
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“The synergy between the two entities can potentially increase the overall valuation of Presco, thereby making it more attractive to investors,” it said.
Presco stated that there will be increased competitiveness of the larger entity through leveraging the individual company strengths and the exploitation of synergetic opportunities across the supply chain.