Ahead of the company’s annual general meeting slated for Tuesday, August 9, 2025, directors of Presco Plc, on Friday released an explanatory note to enhance better understanding and woo shareholders to approve their bid for a fresh N250bn capital injection by passing relevant resolutions that would give effect to the plan.
According to the explanatory note published on the Nigerian Exchange Limited platform and signed by Frederick Ichekwai, Company Secretary of the leading integrated agro-industrial company in Nigeria, the fresh capital injection is needed to strategise for sustained long-term growth and profitability by taking advantage of some opportunities, and create a financial buffer that will support business expansion.
GOPDC, a related party to Presco, operates about 21,000 hectares of oil palm plantations of which 13,000 hectares have been developed for up to 6,000 outgrowers and can produce over 35,000 tonnes of palm oil and palm kernel oil yearly, with a storage capacity of 21,000 tonnes. Incorporated in Ghana on December 6, 1995, GOPDC is a wholly owned subsidiary of Société d’Investissement pour l’Agriculture Tropicale (Siat SA), the core shareholder of Presco, employs about 30,000 workers in peak harvest season and offers direct and indirect income to over 50,000 people.
SOP, on the other hand, was incorporated in Nigeria on July 4, 2019, and specialises in the cultivation of oil palm, extraction of crude palm oil and palm kernel oil, and distribution of refined oil products, is a wholly owned subsidiary of SIAT SA. Both are related parties, being a subsidiary of SIAT SA, a key shareholder in Presco.
Specifically, Presco plans to conclude the acquisition two sister companies- 100% equity stake in Ghana Oil Palm Development Company Limited (GOPDC) for US$124.926m, and wants the AGM to approve the proposal to acquire Saro Oil Palm Limited (SOP) for US$46.710m. In additional, the company also seeks the balance of the capital raising exercise for strategic initiatives, and refinance of existing debt.
Presco has acquired 70,580,000 ordinary shares of GOPDC for US$124,926,600 or USD1.77 each, which was settled in phases, with an initial payment of US$64,961,832 and the balance of $59,964,768 to be settled with the proceeds from the proposed rights Issue. This has made GOPDC a subsidiary of Presco, while an offer to acquire the entire 5,000,000 ordinary shares of SOP, for US$46,710,526 representing a price of $9.34 each has been made to SIAT SA.
The board of Presco recalls that shareholders at the 2024 AGM, approved the resolution for business expansion and the acquisition of GOPDC, but that the approval is being sought anew because of ongoing litigation, while taking the precaution to re-submit all the resolutions originally passed at the previous AGM.
The directors of Presco see the transactions creating significant value for shareholders and relevant stakeholders through increased market share and customer base, making Presco a large African conglomerate with plantation size rising by 37% to about 59,760 hectares. The deals will also help Presco’s revenue is exposed to a single in local currency, as GOPDC generates an estimated 41% of its revenue from export sales primarily in US Dollars and Euros, thereby mitigating the impact of adverse exchange rate movements on the group’s financial performance. Also, the transactions is expected to strengthen Presco’s competitive position and drive productivity through cost savings from streamlining its processes; optimising resource utilisation and positioning more effectively to meet the market demands as a consolidated oil palm business.
The proposed acquisition of SOP, the directors further explained, “presents a compelling opportunity to unlock significant long-term growth for Presco and deliver substantial value to shareholders.
“By acquiring SOP, Presco can accelerate its expansion from about 43,547 hectares to about 59,760 hectares – an achievement that would typically take three to five years organically due to the challenges of land acquisition and capex requirements. SOP’s well-positioned and attractive land bank of over 14,000 hectares provides a strategic advantage, offering a ready platform for scalable and sustainable growth without the delays and uncertainties of securing new land enhancing the maturity profile of Presco’s plantation,” Presco Directors argued.
Both transactions, the directors further explained, would “drive increase market value of the larger entity listed on the Nigerian Exchange Limited (NGX) post the Acquisitions,” just as they will support a broader group-wide realignment centred on operational efficiency, specialization, and long-term value creation.
The enhanced market value is equally expected to boost Presco’s market value and enhance investor confidence that will improve access to capital through secondary stock offerings and bond issuances after both transactions are consummated.
“The synergy between the entities can potentially increase the overall valuation of Presco, thereby making it more attractive to investors,” even as the emergent Presco Group benefits from leveraging individual company strengths and exploiting synergies across the supply chain, bolstering its competitive position in both domestic and regional markets.
To ensure that the shareholders are not being shortchanged, Presco said it engaged KPMG Professional Services (KPMG) to provide a fairness opinion on the valuations, given the related party nature of both transactions.
“Their opinion was that the consideration is lower than their estimate of the value of GOPDC and as such, is fair to the shareholders of Presco. Similarly, KPMG Professional Services concluded that the Offer is lower than their estimate of the value of SOP and as such is fair to the shareholders of Presco.”
Furthermore, to further ensure fairness to minority shareholders, and in line with “the requirements of the NGX on related party transactions, SIAT SA, the core shareholder of GOPDC and a significant shareholder in Presco, will not vote on the resolutions to approve the transactions.
“To this end, the decision to proceed with the Transactions will be made by the minority shareholders of Presco,” the company assured.
