Kayass Enterprises produces packaged milk powder, flavoured milk, juices and UHT milk, and it owns two factories in plants in Lagos - a dairy and beverage manufacturing plant and a milk powder packaging facility.The company's beverage brands include Nature's Fresh and Yo-Jus, and its milk powder brand - Blue Boat - is a leading brand in the category.
According to Olam, the purchase of an existing player with modern manufacturing capabilities would speed up its entry into dairy and beverage segments, allowing it to take advantage of Nigeria's fast growing consumer market.
Olam packaged foods senior vice president and head M Ramanarayanan said the acquisition enables the company's packaged foods business to enter and scale up in another large packaged foods segment in Nigeria.
"We believe that Olam, combined with the assets and capabilities of Kayass, will be competitive in offering differentiated products based on our best practices in manufacturing, global sourcing, product development and innovation, branding and marketing," Ramanarayanan added.
Olam plans to fund the investment through internal accruals and borrowings and expects it to be earnings accretive from the fiscal 2014.
The company forecasts this investment to generate 20% of EBITDA margin by fiscal 2016 and deliver Equity Internal Rate of Return (IRR) of 35%.
Olam, which started its operations in Africa in 1989, has its presence in West African markets such as Nigeria, Ghana, Ivory Coast, Mali, Burkina Faso, Togo and Niger, where it produces tomato paste, pasta, seasonings, noodles, and biscuits.
