Tiger Brands has acquired a 63 percent stake in Dangote Flour, as Aliko Dangote accepts a deal worth $188 million, in Tiger’s biggest acquisition in Nigeria to date.
The sale of 3.1 billion shares in Nigeria’s second largest flour producer went through on the Nigerian Stock Exchange yesterday, at a share price of 9.50 naira ($0.06) per share.
The sale comes after months of negotiations and waiting – the initial deal price having been agreed in July of this year. However, in line with Nigerian regulatory requirements, the 63 percent acquisition by the South African company had to be given the seal of approval by Nigerian authorities. This approval finally arrived on September 25th, allowing the deal to be implemented yesterday.
The deal sees Dangote chairman Aliko Dangote’s holding company, known as Dangote Industries Limited, retain a 10 per cent strategic stake in the company. The billionaire – who is Africa’s richest man, with a net worth valued at $11.2 billion – will also remain the chairman of the flour milling and pasta producing enterprise.
Dangote Flour currently commands over 30 per cent of the Nigerian flour milling market and more than 40 percent of the country’s pasta market, making it the second largest producer in the country.
Tiger Brands – which is a leading South African Fast Moving Consumer Goods (FMCG) company – has made three transactions in Nigeria to date. However, at 30 billion naira ($188 million), the purchase of Dangote Flour is the company’s largest deal yet in the West African country. The company’s other two deals in Nigeria took place last year, with Tiger acquiring 100 per cent of Deli Foods Nigeria at a cost of 296.3 million rand ($36 million), and the purchase of a 49 percent stake in UAC Foods Nigeria totalling 421.1 million rand ($51 million).
Dangote Flour share prices were trading flat on the Nigerian Stock Exchange at 13.15 GMT on Thursday following the deal, at 8.59 naira ($0.05), with brokers assuring that the transaction had already been priced in.
