UAC of Nigeria PLC is focusing on growth, boosting margins, and improving capital efficiency by bringing CHI Limited into the fold, with its ₦54bn EBITDA set to play a key role in the group’s 2025 value creation plan.
Group Managing Director Folasope Aiyesimoju described the acquisition as a strategic move to boost UAC’s presence in fast-moving consumer goods. He called CHI a “house of scalable quality brands” that fits perfectly with UAC’s current consumer platform. He highlighted that the deal immediately opens doors to three high-growth segments—drinking yoghurt, milk, and juice—which were previously missing from UAC’s lineup.
He highlighted the strength of CHI’s operating model despite currency swings. Even with the naira dropping from 360 to 1,600 to the dollar, the company grew its margins and kept throughput strong. Aiyesimoju noted that shortening the inventory cycle is a key efficiency opportunity, with CHI’s roughly 220-day cycle leaving plenty of room for improvement.
Benchmarking both UAC Foods and CHI over the last performance cycle, he highlighted strong top-line momentum across the board.
UAC Foods saw 60 per cent year-on-year growth, while CHI grew 46 per cent. The CEO noted that the main synergy now lies in boosting margins, pointing out that CHI currently runs at about a 6 per cent margin, to raise it to 15 per cent. Given CHI’s annual revenue of roughly ₦500bn, each 1 per cent increase would add ₦5bn in profit. This 9-point jump, nearly ₦45bn, is the top value-creation focus for management right now.
Aiyesimoju spoke about the company’s leverage, noting that UAC has long-term debt of about two and a half times its EBITDA but enjoys strong cash flows, with over ₦700bn of annual sales done in cash. He said the company is in a good position to reduce debt while still delivering returns to shareholders, thanks to its solid operating cash flow. He also mentioned that the board sees the transaction as a result of strong governance, clear strategy, and market confidence.
Group Finance Director Funke Ijaiya Oladipo shed more light on the financial structure behind the deal. She highlighted that CHI posted ₦428bn in revenue and ₦54bn in EBITDA in 2024, with this EBITDA figure serving as the key performance benchmark for UAC’s integration and synergy plans in 2025. She emphasized that significantly growing the ₦54bn remains the organization’s main focus as they approach their December strategy meeting.
She revealed that UAC spent ₦182bn on the acquisition, set up entirely through a newly formed special purpose vehicle. CHI came debt-free with ₦22bn in cash, while transaction costs were around ₦9bn. Since the payment to sellers was in dollars, UAC hedged its currency risk and used a dollar bridge facility to speed up the deal. The funding mix was 17 per cent equity and 83 per cent bank debt, with long-term refinancing already arranged to switch the bridge loan into a naira-based structure. UAC’s ₦150bn bond programme offers extra room for balance sheet optimisation as interest rates continue to decline.
Ijaiya Oladipo described the acquisition plan as a strategic step to secure steady funding while keeping the flexibility to adjust leverage as synergies take shape. She highlighted that the financial strategy aims to boost cash flow and reduce risks as the group expands into dairy and beverages.
With CHI now integrated, UAC is rolling out a focused, margin-driven growth plan that puts CHI’s ₦54bn EBITDA at the center of its 2025 value creation strategy, setting up the expanded group to boost returns across Nigeria’s top consumer markets.
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