Ghana Oil Palm Development Company acquired in US$125 million deal

Nigerian oil palm company Presco Plc. has acquired a 100 percent equity stake in the Ghana Oil Palm Development Company (GOPDC).

The acquisition, according to Presco, is worth some US$124.9million. However, Presco will make an initial deposit of US$64.9million, with the balance to be settled in future.

Presco expects that the deal will help in its currency diversification efforts, as GOPDC generates about 41 percent of revenue from export sales.

President -Oil Palm Development Association of Ghana (OPDAG), Samuel Avaala, told the B&FT that the deal may not affect existing GOPDC employees in terms of job losses. He however said the new owners could change the company’s direction as well as present management members.

GODPC is currently a subsidiary of Societe d’Investissement pour l’Agriculture Tropicale (Siat) SA, one of the key shareholders in Presco. The company’s operations are similar to Presco’s, being into the cultivation of oil palm and extraction of crude palm oil and palm kernel oil as well as the production of refined oil products.

GOPDC presently operates from two oil palm estates in the Eastern Region of Ghana – the Kwae Estate and Okumaning Estate – with about 21,000 hectares of oil palm plantations, of which 13,000 hectares are developed.

The company presently has processing facilities comprising a 60 metric tonnes per hectare fresh fruit palm oil mill; a 100 metric tonnes per day refinery; a 60 metric tonnes per day palm kernel mill; a fractionation plant; and a palm kernel cake pellet plant.

The company has an annual production capacity of 35,000 tonnes of palm oil and palm kernel oil. It also has a storage capacity of 21,000 tonnes.

GOPDC manufactures red palm oil and vegetable oil under the ‘King’s’ brand. The company also employs about 30,000 workers during its peak harvest season.

For the year ended December 31, 2023, GOPDC recorded a net revenue of US$30.6million. It posted a gross profit of US$18.1million as well as an operating profit of US$12.6million during the year.

During the fiscal year ending December 31, 2023, GOPDC recorded an operating margin of 41.2 percent, showcasing its impressive operational output.

According to forecasts, the company’s revenue is expected to hit US$80.95million by 2028 – with its operating margin expected to decline slightly to 39.7 percent.

Presco notes some of the reasons for the deal, including increased market share and customer base. The company expects the transaction will cause its plantation size to increase by 19 percent, from 43,457 to 51,760 hectares.

Another rationale proposed by the company is economies of scale, as the deal is expected to help Presco strengthen its competitive position as well as optimis its resource utilisation.

It is expected that the deal will lead to an increase in Presco Plc.’s market value on the Nigerian Stock Exchange, thus allowing the company easier access to capital in future.

GOPDC was established by the Government of Ghana (GoG) in 1975, and is today a leading oil palm plantation and processing company. However, government’s current percentage share in the company is not known.