Fresh details are emerging about UAC Nigeria’s acquisition of CHI Limited. The N182.4 billion deal is on record as the largest merger and acquisition deal in the Nigerian consumer goods space in Naira terms. The size of the transaction underscores UAC’s ambition to transform its market position in the consumer goods space.

The transaction, which is expected to increase UAC Nigeria’s 2025 revenue by over 200 percent, will see UAC become one of Nigeria’s largest food and beverage players. At the end of 2025, CHI and UAC Foods are expected to have a combined revenue of about N615 billion, with UAC Foods at N79 billion and CHI at N536 billion.

In the first nine months of 2025, the expanded group’s topline was N717 billion. When compared with the N223 billion revenue generated by UAC Nigeria without CHI, it reflects the massive scale of CHI’s integration into the UACN ecosystem. EBITDA for the expanded entity closed at N67 billion, up from N25 billion before CHI’s inclusion.

Breakdown of the deal

The N182.4 billion acquisition was funded through two channels, with N30.8 billion drawn from UACN’s cash reserves and the remaining N151.6 billion financed through debt. The debt component is a USD-denominated bridge loan priced at the Secured Overnight Financing Rate (SOFR) plus 5.5 percent.

According to UACN’s investor presentation, the bridge loan will be refinanced through a combination of bond issuances and term loans, beginning either in the fourth quarter of 2025 or the first quarter of 2026. During the presentation, UACN Group CEO Folasope Aiyesimoju emphasised that the USD exposure was “100 percent hedged”, noting that a forward contract was already in place to protect the business from currency volatility.

The massive scale of CHI’s acquisition

Aerial View of CHI Limited Factory in Ajao Estate, Lagos

As captured earlier, the acquisition of CHI is of massive scale when compared to UACN’s current size. The scale of the entity reflects across UAC’s entire financial performance. With the surge in revenue also comes a surge in profit levels, with EBITDA surging by 2.7x to N67 billion.

The operational footprint tells a similar story. CHI employs 1,590 full-time staff and 3,444 contract workers. The workforce massively dwarfs UACN’s numbers. UACN had 1,367 employees at the end of 2024.

The balance sheet reflects the scale even more clearly. UACN expects its Net Working Capital (NWC) to reach N181 billion by the end of 2025. This represents a 341.5 percent increase from the N41 billion recorded in 2024. The company has already secured N118 billion in working capital financing, using the projected NWC expansion as leverage.

When added to the N152 billion used to finance the CHI acquisition, this has pushed UACN’s net debt to N270 billion. However, the group insists that this is manageable. Its cash generation remains strong and exceeds debt-service costs by N56 billion.

During the investor call, Aiyesimoju addressed speculation about an equity raise. He stated,

“We have no plans for an equity raise. Our cash flow is comfortably above our debt-service obligations, and we believe raising equity now would leave us with excess cash without a clearly identified deployment need.”

CHI’s growth trajectory adds another layer to the story. Revenue grew at a compound annual rate of 46 percent between 2022 and 2025. However, the company faced margin pressure. Operating margins fell from 15 percent in 2022 to an expected 6 percent by the end of 2025. But for UACN, margin improvements are not uncharted waters.

They note, “We have recorded meaningful success in this regard in a very similar business” referring to UAC Foods. Within the same period, UAC Foods’ operating margin went up from 1 percent in 2022 to a projected 15 percent at the end of 2025.

CHI will be standalone for now

To acquire CHI, UAC set up a special purpose vehicle, UAC Food and Beverage Company Limited (UFB). When asked about plans to integrate CHI Limited into one of the existing subsidiaries, Aiyesimoju said that such plans do not exist for now.

He noted, “There have been arguments for and against that move. However, for now, the corporate entity CHI Limited would remain.”

A review of CHI’s new management team shows a high level of continuity. Six of the eight members of the leadership team were retained from the previous management. UACN’s GMD, Folasope Aiyesimoju, now serves as Chairman. UACN’s Group Finance Director, Funke Ijaiya-Oladipo, has taken on the role of Chief Financial Officer.

The rise of a consumer goods powerhouse

The combination of UACN and CHI is a major event in Nigeria’s consumer goods landscape. For UACN, the deal brings together its heritage as Nigeria’s oldest conglomerate with a portfolio that includes iconic brands such as Gala, SWAN Water, Mr Biggs, Sandtex Paints, and Dulux, among others.

CHI Limited adds another powerful collection of brands. Hollandia, introduced in 1980, remains one of Nigeria’s most recognisable dairy beverages. Caprisun, introduced in 1982, is a dominant player in the juice segment. Chivita, launched in 1997, is one of the country’s strongest ready-to-drink juice brands.

Together, these brands create a consumer goods powerhouse that features over 26 brands in the consumer goods space. (BusinessDay)