Tiger Brands’ 1.5 billion rand ($183 million) deal to buy a majority share in Dangote Flour Mills has received approval from the Nigerian authorities, the South African company announced today.
Tiger Brands – a leading South African Fast Moving Consumer Goods (FMCG) company – reached an agreement with Dangote Flour Mills in July of this year to purchase a 63.5 percent stake in the Nigerian bread and pasta producing company. However, in line with Nigerian requirements, the deal could not go ahead pending approval by the Nigerian Securities and Exchange Commission (SEC). Tiger Brands today announced that approval has been granted, and as such the deal will go ahead immediately, stating: “Tiger Brands is pleased to announce that the Parties have received written confirmation from the SEC that the Transaction has been approved. The Parties have therefore signed the SSPA and will cooperate to implement the Transaction”.
Dangote Flour Mills currently holds approximately a 30 percent segment of the Nigerian flour and pasta market, and is the second largest such producer in the country. Owned by Africa’s richest man, Aliko Dangote – who boasts a net worth of $11.2 billion (Forbes, 2012) – the deal sees Dangote remain as chairman of the company, with the billionaire industrialist retaining a 10 percent strategic stake in the company for at least a five-year period.
The deal is the third concluded by Tiger Brands in Nigeria – a country that it has pinpointed as a key location in its African expansion strategy, saying: “The Transaction will add significant scale to Tiger Brands’ existing Nigerian businesses and represents a further important step in Tiger Brands’ expansion strategy on the balance of the African continent.”
Previous Nigeria-based agreements include a 296.3 million rand ($36 million) deal to buy 100 per cent ownership of Deli Foods Nigeria last year, and the purchase of a 49 per cent stake in UAC Foods Nigeria at a cost of 421.1 million rand ($51 million).
However, at 9.50 Nigerian naira per share (0.49 rand, $ 0.06), amounting to a total purchase price of 30,093 million naira (1,563,887,092 Rand, $ 190,703,391), the deal given the go-ahead today is Tiger’s biggest deal in Nigeria to date.
The company’s statement also disclosed that the Johannesburg Stock Exchange and the South African Reserve Bank have all given their approval to the deal, which will take effect as soon as possible after October 1st.
Tiger Brands already has operations across the African continent, in Cameroon, Ethiopia, Kenya and Zimbabwe. However, it has over the past year demonstrated a significant push to achieve dominance in the market in Nigeria – the second largest economy in Africa. This latest development certainly sees Tiger put itself in prime position, taking on majority ownership of the company that holds 30 percent of the flour milling market, and near 40 percent of the pasta market in Nigeria.
