M&A in Africa
Accelerating Japanese investment into Africa
When in August 2016 Japanese Prime Minister Shinzo Abe announced a three-year programme to invest $30bn of public and private money in Africa, Ajinomoto, Japan’s biggest food company, was one of the first companies to take advantage.
Like many Japanese businesses facing market saturation at home, Ajinomoto was looking for growth overseas. The economies of sub-Saharan Africa – where an expanding middle class is driving demand for convenience food – were particularly attractive.
An opportunity arose when Tana Capital – a joint venture between Singapore’s state investment agency Temasek and the Oppenheimer family – decided to sell its 25 per cent holding in processed foods manufacturer Promasidor, one of Africa’s biggest companies with a distribution network spanning 36 countries from Algeria to Angola.
Plexus Investments was also looking to divest an 8.33 per cent stake, with Ajinomoto acquiring the combined share for $532m.
Stiff competition at auction
The sale was run as an auction by Nomura, with us and Goldman Sachs jointly advising Ajinomoto on bid strategy.
We and Goldman Sachs jointly advised Ajinomoto on bid strategy
Our working assumption was that, as a financial investor, Tana Capital’s primary goal in pursuing the transaction would be to maximise the value of its stake in the sale. Plexus, which was selling-down only a small proportion of its stake and would remain the majority shareholder in Promasidor, would be focused on identifying the right long-term partner with whom it could continue to grow the business.
There are few truly pan-African companies outside the commodities, telecoms and financial services sectors, so the auction was very competitive. Bidders were looking for a widespread distribution network across the continent, the aim of many of our global clients looking for growth.
In light of these factors, our focus was ensuring that we presented a bid to Tana and Plexus that would satisfy those goals so that we could see off the rival bidders.
Our focus was to present a bid to Tana and Plexus that would see off the rivals.
A bidder with the right credentials
Despite the competitive sale process, we were confident Ajinomoto was a strong suitor. Its R&D and production capabilities complemented Promasidor’s pan-African sales and distribution network. And having been in Nigeria since 1991, it had plenty of experience of doing business in Africa.
With our strong network of partner firms, we could call on the continent’s best lawyers to help execute the transaction. And the combination of our own experience of doing deals in Africa and our deep understanding of Japanese law and corporate culture enabled Ajinomoto to get comfortable with the level of risk.
With our strong network of partner firms, we could call on the continent’s best lawyers to help execute the transaction.
A neat ending
Unusually for a deal of this scale, the signing, board meeting and closing all happened on the same day – and at the same as Ajinomoto announced its latest set of quarterly financials.
The deal was well received by all parties and capped a hugely successful 2016 in Africa for the firm. We advised on M&A deals worth a combined $2bn – more than half the year’s reported value of transactions on the continent.