Wilmar Acquires PZ Cussons' Stake in Nigerian Edible-Oils JV for $70m

Wilmar International will acquire PZ Cussons' 50% stake in their Nigerian edible-oils JV for $70m. With the deal, Wilmar will own 100% of the JV and plans to onboard a local partner. The JV, PZ Wilmar, is one of Nigeria's largest sustainable palm oil businesses and has a significant opportunity for growth in food and nutrition. Wilmar intends to develop its upstream and downstream businesses in Nigeria. PZ Cussons will use the proceeds to reduce debt and focus on transforming the business.

Wilmar International has announced its plans to acquire the remaining 50% stake in its joint venture (JV) with PZ Cussons in Nigeria, for a total of US$70 million. The acquisition will give Wilmar full ownership of the JV, which is known as PZ Wilmar. This move follows Wilmar's intention to invest in the Nigerian palm oil sector, which it views as offering significant growth opportunities due to the country's large and growing population and suitability for palm cultivation [1].

The JV, established in 2010, is one of Nigeria's largest sustainable palm oil businesses. It operates under the brand names Mamador and Devon King's. The acquisition is expected to be completed in the last quarter of 2025, subject to relevant approvals, and will be funded by internal resources. Wilmar has indicated that it does not anticipate a material impact on its consolidated net tangible assets and earnings per share for the financial year ending December 31 [1].

Wilmar's chairman and CEO, Kuok Khoon Hong, expressed optimism about the long-term potential of Nigeria's palm oil sector. He noted that the country's large and growing population, along with its suitability for palm cultivation, presents a significant opportunity for growth in the food and nutrition business. Wilmar intends to continue developing its upstream palm plantation and downstream businesses in Nigeria [1].

PZ Cussons, the other partner in the JV, will use the proceeds from the sale to reduce debt and focus on transforming its business. The transaction is expected to reduce complexity for PZ Cussons and lessen its exposure to the risks and volatility associated with the Nigerian market. The company has also revised its annual profit outlook, trimming the top end of its adjusted operating profit forecast to between GBP52 million and GBP55 million [2].

The acquisition is a strategic move for Wilmar, which aims to strengthen its position in the Nigerian palm oil market. The company's shares fell to their lowest levels in more than five years at S$2.89 on Wednesday, trading 3% lower at S$2.92 as at 1.25 pm [1].

References:
[1] https://www.businesstimes.com.sg/companies-markets/wilmar-buy-over-nigeria-incorporated-palm-oil-business-british-jv-partner-us70-million
[2] https://www.marketscreener.com/quote/stock/PZ-CUSSONS-PLC-9590103/news/PZ-Cussons-sells-stake-in-Nigeria-joint-venture-narrows-profit-view-50272167/