On Tuesday, 18th of April 2017, Dangote Flour Mill (DFM) owned by Africa’s richest man, Aliko Dangote announced that it has sold its noodles business and assets to Dufil Prima, makers of Indomie noodles for an undisclosed amount.
According to the Group Managing Director, Dangote Flour Mills, Thabo Mabo, the divestment was part of strategies to focus on core areas of flour and pasta production, where the company has substantial market share. This will also help the company focus on the profitability of its core areas by improving in areas of quality, distribution and marketing.
This deal which became effective last Monday will help further increase the dominance of Dufil Prima Foods which already owns the majority share of the noodles market in Nigeria.
“Acquiring Dangote Noodles would help Dufil deepen and sustain its market share as well as gain a strategic advantage in terms of the several ranges of noodles products on its stable,” said the Chief Executive Officer, Dufil Prima Foods, Deepak Singhal.
This announcement comes at a time Dangote Flour Mill recorded its first profit after four years of consecutive losses posted when Tiger Brands was in charge. It would be recalled that the noodles business was part of Dangote Flour Mill, which Dangote Grup bought back from Tiger Brands in 2015. Dangote Flour Mill financial results for the 15 months ending December 2016 posted an after-tax profit of 10.6 billion naira.
The terms and condition of the deal
According to Deepak Singhal, Dufil Prima Foods will continue to produce and sell noodles under the brand name ‘Dangote Noodles’ for two years before changing the brand name.
He further restated that Dufil was not shutting down the noodles production line but was commencing production immediately.
Dangote Flour Mills said in order to smoothen the transition, it had offered Dufil the use of some of its facilities on an interim basis.
What happens to the workers of Dangote noodles?
To ensure a seamless transition and commencement of production, Singhal stated that Dufil Prima Foods would employ most of the former staff members of Dangote Noodles.
With the new development, some former employees of Dangote noodles would transit to Dufil Prima Foods, while the rest redundant workers had been adequately compensated with a severance package for their services to the company over the years.
Singhal added that the terms of the severance package were agreed with the relevant trade unions and the affected workers were paid off immediately to enable those retained by the new owners to start on a fresh contract, while those who would not be retained would not have to wait for their benefits.