Ajinomoto: to Acquire Stake in Promasidor Holdings

Tokyo / JP. (aci) Japan’s Ajinomoto Company Incorporated reached an agreement to acquire a 33.33 percent stake in Promasidor Holdings Limited (British Virgin Islands), a major processed foods manufacturer that conducts business in 36 countries in Africa, for USD 532 million (approximately JPY 55.8 billion)’1 and signed the share purchase and sale agreement today.2 By combining Ajinomoto Co.’s extensive product development capabilities and production technologies with Promasidor’s powerful sales and distribution network in Africa, Ajinomoto Co. and Promasidor seek to become a leading player in the seasonings and processed foods business in Africa and contribute to the region’s well-being.

The population of Africa was approximately 1.2 billion as of 2015, and is projected to reach 1.7 billion in 2030 (source: United Nations, 2015). The real GDP growth rate in Sub-Saharan Africa averaged 5 percent annually from 2011 to 2015 (source: IMF, June 2014), and the region is expected to become a huge trading area as growth continues. Expansion of the middle-income consumer segment due to economic growth is leading to diversification of food-related demand and a 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.

Ajinomoto Co. established West African Seasoning Company Limited in Nigeria in 1991, followed by Ajinomoto Foods Egypt S.A.E. in 2011 and Ajinomoto Afrique de L’ouest S.A. in Côte d’Ivoire in 2012, and conducts the seasonings business in Africa with a focus on umami seasoning Aji-no-moto.

Promasidor is a seasonings and processed foods manufacturer that currently conducts business in 36 countries throughout Africa. Mainly operating in the five countries of Nigeria, Algeria, Ghana, the Democratic Republic of the Congo and Angola, Promasidor produces and sells powdered milk, powdered beverages, flavor seasonings, cereals and other food products, and its brands are widely known in the African market. The investment in Promasidor will enable Ajinomoto Co. to strengthen its business foundation across Africa by combining its extensive product development capabilities and production technologies with Promasidor’s powerful sales and distribution network in Africa. In the medium to long term, Ajinomoto Co. aims to establish a position as a leading player in the African market together with Promasidor.

In its FY2014-2016 Medium-Term Management Plan, the Ajinomoto Group has positioned the Africa/Middle East region as one of the «Rising Stars» (countries and regions targeted for accelerated business expansion), along with Europe/North America. By accelerating business expansion in these areas as key growth drivers, the Ajinomoto Group aims to become a genuine global specialty company.

Ajinomoto Co. will acquire 33.33 percent of the shares of Promasidor today. It will participate actively in Promasidor’s management and business operations through representation on its board of directors and in other ways, and Ajinomoto Co. and Promasidor will consider integrating their Nigerian subsidiaries. Following the share purchase, Ajinomoto Co. plans to make Promasidor an affiliated company accounted for by the equity method. The impact of this matter on business results for fiscal 2016 is immaterial.

1. USD 1 = JPY 104.86 (Exchange rate as of October 31, 2016);
2. Ajinomoto Co. will acquire 8.33 percent from Plexus Investments Limited, and 25.0 percent from Tana Promasidor Holdings Limited.