Ajinomoto buys stake in Promasidor for $532 million

Japanese food and ingredient manufacturer, Ajinomoto has agreed to buy a 33% stake in Promasidor at a cost of $532m (approx. ¥55.8bn yen).

The stake gives Ajinomoto access to Promasidor’s distribution network in 36 African countries. The deal values Promasidor at about $1.6bn.

Ajinomoto seeks to attract Africa’s growing middle class consumers to its products. The company sees rising demand for low-priced foods and daily essentials on the continent.

According to the United Nations, Africa’s population in 2015 stood at 1.2 billion and is expected to reach 1.7 billion by 2030. Real GDP growth rate in Sub-Saharan Africa averaged 5% annually from 2011-2015, according to the IMF. The region is expected to see strong activity in commerce as growth continues. Expansion of the middle-income consumer segment as a result of economic growth is leading to diversification of food related demand and greater need for convenience, particularly among younger consumers. Given these trends, the seasonings and processed foods market is expected to grow strongly in the future.

The Japanese government on its part has been urging its country’s businesses to take advantage of the numerous opportunities that exists in the African market. Earlier this year, it launched a market research initiative to support business expansion in Africa. Companies such as Ajinomoto, Meiji Holdings, Kewpie, Nissan Food Holdings, among others are taking part in the project.

Ajinomoto already has some presence in Africa – in places like Nigeria where it set up shop in 1991 with the West African Seasonings Co Ltd. It also operates in Egypt and Ivory Coast. However it is hoping to use the partnership with Promasidor to strengthen its business foundation on the continent by combining its extensive product development capabilities and production technologies with Promasidor’s extensive distribution network.

Promasidor was founded in 1979 by Robert Rose, a British citizen who began selling milk powder in small, affordable sachets in the Democratic Republic of Congo (DRC) and the company has since grown to include other products and spread to 36 African countries. The company had net sales of about $673 million in fiscal 2015 and employs approximately 4,000. The company mainly operates in five countries: Nigeria, Algeria, Ghana, the Democratic Republic of Congo and Angola but distributes in others.

Ajinomoto is a global manufacturer of high-quality seasonings, processed foods, beverages, amino acids, pharmaceuticals and specialty chemicals. The company was founded in 1909 and currently operates in 27 countries and had 2015 net revenue of $9.87bn (approx. ¥1,185.9 trillion yen).

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