By Goddy Egene
The Nigerian Bag Manufacturing Company Limited (BAGCO), listed on the Nigerian Stock Exchange (NSE) in 2007, will be delisted from the Nigerian bourse.
The delisting will follow a merger of the company with its parent firm, Flour Mills of Nigeria Plc. In a notification to the NSE last week, Flour Mills of Nigeria and BAGCO said they were proposing to merge their operations including that of BAGCO North, which is a subsidiary of BAGCO.
According to the merger plan, all assets, liabilities and undertakings of BAGCO and BAGCO North would 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 therefore be dissolved without winding up.
The companies explained that the merger was being 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, Northern Bag Manufacturing Company Limited (BAGCO North) was established in Kano in 1990 to further increase the capacity of sack production and improves distribution.
Currently, the BAGCO Group has a capacity of 30 million sacks per month, which are used to package powder and granular industrial products (cement, fertiliser, flour, sugar, salt, detergent) and open market products such as shopping bags, agricultural products among others.
The company closed at N1.80 per share last week and is the fifth highest priced among the eight stocks listed in the packaging/containers sub-sector of the exchange.