KEY POINTS

• Flour Mills of Nigeria plans to buy out minority shareholders following regulatory approval.
• The acquisition is part of a broader strategy to streamline operations and enhance growth.
• The move will allow Flour Mills to increase its control and strategic direction in the company’s operations.

The Nigerian agro-allied firm, Flour Mills of Nigeria has in recent past declared its intention to acquire the remaining stakes in the company after receiving regulatory approval for the move.

This action is in tune with the agreed development agenda of the company of synergizing its operations and enhancing its revenue base in order to enhance its control of the Nigerian agro-food market.

Strengthening market position

Flour Mills has remained a strategic player in the Nigerian food and agriculture value chain for over five decades with interests in flour milling, pasta manufacturing, and sugar refining.

Therefore, buying out the remaining shares, the company plans to gain more control over the major management activities and, therefore, get more leeway to respond to the changes in the market as quickly and as efficiently as possible.

According to Business day, it will boost its supremacy in the Nigerian market via this acquisition.

The company has plans to rationalize the corporate structure and thereby have improved decision making especially in situations that the company is operating in a competitive market environment.

The increased control of this operation will help Flour Mills to look for new growth prospects in the regional and international market.

Expanding the growth potential

This acquisition is also viewed as a prospect of expanding some new growth opportunities in Flour Mills. Business Day reported that the company said it will be able to increase profitability and prepare for further growth by buying out its minority shareholders.

This is part of the company’s strategic plan that has seen it shift its attention on enhancing the shareholder’s value through operational streamlining.

It will also enable the company to direct its energies towards long-term goals such as diversification of the company’s product portfolio and improving the production processes.

This un-complicates its corporate structure and enables the company to use its resources well in a bid to enhance its operations.

Boosting shareholder value

This decision by Flour Mills is part of a general trend that has been experienced across the business world of companies outsourcing in a bid to improve operational efficiency with an aim of improving the value of shareholders.

Such a change in the ownership structure is in line with other general trends that have characterized the industry in themes of increasing profitability and competitiveness.

Flour Mills is in a position to take long-term strategic business decisions which are more beneficial to the company than taking short-term gains out of most of the shares owned by the company.

This is a business tactic that brings change in the manner the business organizes its operations.

Being able to make decision for itself, Flour Mills can now undertake certain strategic plans that it regards as strategic for the firm without being forced to consider minority shareholders’ issues.

Future outlook

The purchase of minority shareholders’ stakes places Flour Mills of Nigeria in a good standing to grow in the future.

There is a reduction of corporate complexity and increase in operational productivity which puts a competitive advantage for the company in the national and global fronts.

It is also believed that the change will provide new directions for its growth and profitability, thus meeting the company’s strategic objectives.

Hence, the planned acquisition of the minority shareholders by the Flour Mills of Nigeria, is an important move outlined in the strategic management plan to carry out rationalization of its operations, improvements in productivity and a consequent delivery of enhanced shareholders’ value.

Having received the necessary permits, the company has a unique opportunity to strengthen its position in the market and develop new directions for its activity.