The Nigerian Bag Manufacturing Company Limited (BAGCO), which is preparing for a merger with its parent firm, Flour Mills of Nigeria Plc, has reported a profit of N786.723 million for the six months ended September 30, 2012.
The company will be delisted from the Nigerian Stock Exchange (NSE) after its merger with Flour Mills.
Meanwhile, it reported a turnover of N11.77 billion, showing a decline of about five per cent, down from N12.449 billion in the corresponding period of 2011. Profit after tax rose from N696.709 million in 2011 to N786.723 million in 2012.
BAGCO, which was listed on the NSE in 2007, will be delisted from the Nigerian bourse, following its proposed merger with Flour Mills of Nigeria.
The firm, which manufactures sacks, had in a notification to the NSE last September, said it was proposing a merger with Flour Mills of Nigeria.
The company revealed that the merger will also include BAGCO North, which is a subsidiary of BAGCO.
According to the merger plan, all assets, liabilities and undertakings of BAGCO and BAGCO North will be transferred to Flour Mills of Nigeria.
Consequently, the entire issued share capital of BAGCO and BAGCO North, respectively will be cancelled and the minority shareholders of BAGCO will have an option to elect for cash or shares in Flour Mills at a price to be determined using mutually agreed valuation methods. The sack manufacturing firms will therefore be dissolved without winding up.
The companies explained that the merger was informed by the need to streamline operations, reduce administrative costs, improve operating efficiency and capture the full synergies arising from the merger, which, in turn will result in a significant enhancement of shareholder value.
Although the NSE said the Flour Mills and BAGCO were yet to formerly apply for the merger, market operators said shareholders of the both firms would be willing to approve it, given the synergies and value it will create for them.
BAGCO was established in 1972 to provide quality sacks to support the industrial and agricultural market sectors of the Nigerian economy. Arising from this base, BAGCO North was established in Kano in 1990 to further increase the capacity of sack production and improve distribution.