Kellogg Company is based in downtown Battle Creek. Photo via flickr.com
A food maker has partnered with an African food company and acquired a distributor in the continent to increase its presence in the growing African market.
Battle Creek-based Kellogg Company announced today the creation of a joint venture with leading food company Tolaram Africa to develop snacks and breakfast foods for the west African market.
To support the partnership, Kellogg also announced the acquisition of 50 percent of Multipro, a sales and distribution company in Nigeria and Ghana.
Kellogg said it has been operating in Africa for more than 35 years and expects to experience growth in coming years.
Kellogg has agreed to pay about $450 million for the 50 percent stake in Multipro and the option to purchase a stake in Tolaram Africa Foods. Total sales are expected to be about $750 million in 2015.
Kellogg said it will fund the acquisition using international cash and an increase in commercial paper of $350 million.
The company expects that reported earnings per share, excluding transaction and integration costs, will not be affected by the transaction in 2015 or 2016. The company expects slight earnings accretion in 2017.
“Strategic fit” with Tolaram Africa
The Kellogg agreement with Tolaram Africa gives Kellogg the option to acquire a stake in Tolaram Africa Foods, which owns 49 percent of Dufil Prima, in the future.
Dufil Prima makes and markets several leading food brands, including Indomie noodles, which are often consumed at breakfast, as well as Minimie snacks, Power oil and Power pasta.
"Tolaram Africa has built a highly successful consumer products business, and today, it is one of the largest food companies in Nigeria," said John Bryant, chairman and CEO, Kellogg Company.
He also noted Sub-Saharan Africa is experiencing “explosive growth, with a population of almost one billion people and an economy that is expected to more than double over the next 10 years,” creating a “tremendous opportunity” for Kellogg to capitalize on.
“This partnership is an excellent strategic fit for Kellogg,” Bryant said.
Amit Banati, president, Kellogg Asia Pacific, said Kellogg’s iconic brands and research and development expertise, combined with Tolaram’s strong local sales, marketing, supply chain and distribution capabilities “positions us to become a breakfast and snacks leader in a thriving market.”
Multipro, established in 1997, has a strong sales and distribution infrastructure in Nigeria.
Headquartered in Lagos, the company provides access to about 1,000 exclusive distributors, 2,600 employees and operates 19 warehouses across six locations.
It is also establishing similar networks in other key African countries, including the Democratic Republic of Congo, Ivory Coast, Cameroon and Ethiopia.