Nigeria’s Presco To Acquire Ghanaian Oil Palm Coy For $125m

Nigeria’s leading oil palm company, Presco Plc, is set to secure a 100% equity stake in the Ghanaian Oil Palm Development Company (GOPDC) for $124.9 million.

The acquisition involves purchasing 70,580,000 ordinary shares of GOPDC at $1.77 per share.

According to a corporate disclosure accessed, Presco will make an initial deposit of $64.962 million, with the remaining balance to be settled in the future. This strategic acquisition is expected to bolster Presco’s currency diversification efforts, as GOPDC generates about 41% of its revenue from export sales.

GOPDC, currently a subsidiary of Societe d’Investissement pour l’Agriculture Tropicale (Siat) SA, a key shareholder in Presco, operates similarly to Presco. Both companies are involved in the cultivation of oil palm, extraction of crude palm oil and palm kernel oil, and the production of refined oil products. GOPDC operates from two oil palm estates in Ghana’s Eastern Region—the Kwae Estate and Okumaning Estate—covering about 21,000 hectares, of which 13,000 hectares are developed.

GOPDC’s processing facilities include a 60 metric tonnes per hectare fresh fruit palm oil mill, a 100 metric tonnes per day refinery, a 60 metric tonnes per day palm kernel mill, a fractionation plant, and a palm kernel cake pellet plant. The company boasts an annual production capacity of 35,000 tonnes of palm oil and palm kernel oil, with a storage capacity of 21,000 tonnes. It produces red palm oil and vegetable oil under the “King’s” brand and employs about 30,000 workers during peak harvest seasons.

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For the year ended December 31, 2023, GOPDC recorded a net revenue of 456.35 million Ghana Cedis (~$30.6 million), a gross profit of 270.35 million GHc, and an operating profit of 188.18 million GHc. The company achieved an impressive operating margin of 41.2% during this period. Forecasts predict GOPDC’s revenue to reach 1.2 billion GHc ($80.95 million) by 2028, with a slightly reduced operating margin of 39.7%.

Presco’s acquisition of GOPDC is driven by multiple strategic reasons, including increased market share and customer base. The deal will expand Presco’s plantation size by 19%, from 43,457 hectares to 51,760 hectares. Additionally, Presco aims to achieve economies of scale, strengthen its competitive position, and optimize resource utilization.

The transaction is anticipated to enhance the market value of Presco Plc on the Nigerian Exchange (NGX), providing easier access to capital in the future. Presco is already one of the most profitable companies on the NGX, having posted a pre-tax profit of N50 billion in FY 2023, a 152% increase from the N19.8 billion recorded in 2022. With a net income of N32.9 billion, Presco achieved a return on equity of 57.5% and offered a dividend yield of 10%, making it a highly attractive investment for NGX investors.

Earlier this year, Oak and Saffron, owned by Saroafrica International, acquired a majority stake in SIAT SA, although this takeover has not yet reflected in the company’s financials. SIAT previously owned 100% equity in GOPDC, suggesting that Presco’s acquisition of GOPDC may be part of a broader strategy by Oak and Saffron to consolidate Presco’s listing on the NGX by merging it with other SIAT subsidiaries.