Olam International, Sanyo Foods to establish instant noodles joint venture in Nigeria

Olam International, a Singapore-based processor of agricultural products and food ingredients, has entered into an agreement with Japan’s Sanyo Foods to establish a joint venture (JV) company in Nigeria.

The JV will manufacture and distribute instant noodles in Nigeria and across sub-Saharan Africa.

Under the terms of the agreement, Sanyo Foods will invest $20m in cash for a 25.5% stake through issue of new shares by the JV that will accommodate Olam’s instant noodles assets and business in Nigeria.

Olam will own the majority stake of 74.5% in the JV with management control.

Both the parties have reached the consideration on a willing-buyer willing-seller basis, and the transaction is subject to certain customary closing conditions.

Olam president and global head of the packaged foods business M Ramanarayanan said the company is excited about the next phase of growth for its instant noodles business in the region.

"Our partnership with Sanyo Foods would enable us grow the instant noodles business at a much faster rate with new products and new flavours to delight our consumers," Ramanarayanan said.

Sanyo Foods president Junichiro Ida said; "We believe that enormous synergy can be generated by matching Sanyo Foods’ product development and technical capability with Olam’s existing production facility and strong distribution network."

The JV will build on the strengths of both partners with Olam’s expanding marketing and distribution network across Nigeria and its pan-Africa presence, as well as Sanyo Foods’ expertise in the development and manufacturing of instant noodle products.

Olam’s instant noodles business, which operates under the ‘Cherie’ brand, was part of Crown Flour Mills’ wheat milling business, which Olam acquired in January 2010.

Currently, Olam is among the leading players in the Nigerian instant noodles market, with a distribution network and marketing infrastructure across the country and reported revenues of $24m in 2012.

Established in 1953, Sanyo Foods is a leading instant noodles maker in Japan, with a presence in China, Vietnam, Russia and North America through strategic partnerships.