Nigeria’s oil palm company, Presco Plc, is currently negotiating to acquire a 100 percent equity stake in the Ghanaian Oil Palm Development Company (GOPDC).
The acquisition is expected to cost $124.9 million, involving the purchase of 70,580,000 ordinary shares of GOPDC at a price of $1.77 per share.
Presco will make an initial deposit of $64.962 million, with the remaining balance to be settled at a later date.
It is expected that the deal will help in its currency diversification efforts, as GOPDC generates about 41 percent of its revenue from export sales.
GOPDC is currently a subsidiary of Societe d’Investissement pour l’Agriculture Tropicale (Siat) SA, which is also a major shareholder in Presco. GOPDC’s operations mirror those of Presco, focusing on the cultivation of oil palm, the extraction of crude palm oil and palm kernel oil, and the production of refined oil products.
GOPDC operates from two oil palm estates in the Eastern Region of Ghana the Kwae Estate and the Okumaning Estate, spanning approximately 21,000 hectares with 13,000 hectares already developed.
The company’s processing facilities include a fresh fruit palm oil mill with a capacity of 60 metric tonnes per hour, a refinery with a capacity of 100 metric tonnes per day, a palm kernel mill with a capacity of 60 metric tonnes per day, a fractionation plant, and a palm kernel cake pellet plant.
The company has an annual production capacity of 35,000 tonnes of palm oil and palm kernel oil, and a storage capacity of 21,000 tonnes.
GOPDC produces red palm oil and vegetable oil under the King’s brand.
Additionally, the company employs around 30,000 workers during its peak harvest season.
For the year ending December 31, 2023, GOPDC reported a net revenue of 456.35 million Ghana Cedis approximately $30.6 million.
The company achieved a gross profit of 270.35 million GHc and an operating profit of 188.18 million GHc.
Forecasts predict that the company’s revenue will reach 1.2 billion GHc $80.95 million by 2028, with the operating margin expected to slightly decrease to 39.7 percent, resulting in an operating profit of 479.14 million GHc.
Presco cites several reasons for the acquisition, including increased market share and an expanded customer base. The transaction is anticipated to expand Presco’s plantation size by 19 percent, from 43,457 hectares to 51,760 hectares.
The acquisition is also projected to boost the market value of Presco Plc on the Nigerian Exchange (NGX), making it easier for the company to access capital in the future.
Earlier in the year, it was announced that Oak and Saffron, a company owned by Saroafrica International, had completed its acquisition of a majority stake in SIAT SA.
However, this takeover is not yet reflected in the company’s financial statements.
Presco is one of the most profitable companies on the NGX, having posted a pre-tax profit of N50 billion in Fiscal Year 2023, representing a 152 percent increase from the N19.8 billion pre-tax profit recorded in 2022.
With a net income of N32.9 billion, Presco Plc achieved a return on equity of 57.5 percent for Fiscal Year 2023.
The company also reported a dividend yield of 10 percent, offering one of the best returns on investment for NGX investors.
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