South Africa’s largest food company, Tiger Brands announced through its Nigerian financial advisor, Vetiva Capital that it is ready to increase its stake in Nigeria’s Dangote Flour Mills (DFM) to 70 percent by purchasing ordinary shares worth 332.5 million at N9.50 ($0.06) per share.
In 2012, Tiger Brands initially bought 63.35 percent from Dangote for $181.9 million. The company, which has 49 percent stake in UAC of Nigeria Plc, also acquired Deli Foods Nigeria Limited raising concerns of market monopoly especially when the Securities and Exchange Commissions (SEC) approved the transaction.
“Tiger Brand has shown a strong appetite for taking over our biggest and very best. The Securities and Exchange Commission which regulates anti-trust issues in the economy should start showing interest in the activities of Tiger Brands in order to prevent the emergence of a disguised monopoly or a restraint of competition, which may happen by the time Tiger starts to consolidate her interests in these companies they are acquiring,” Wale Oluwo, Managing Director, Investment Banking, BGL Securities Limited warned.
But DFM’s position as a leader in the market is actually one of the reasons Tiger Brands is buying into the company, as it believes it will enhance its existing businesses in Nigeria and increases its opportunities in the food market
“DFM is a market leader in both the flour and pasta market segment of the Nigerian consumer food sector with strong branding, production and distribution capabilities,” the Company said.
The decision to start the process of increasing its stake to 70 percent indicates that the South African food company is confident of its investment in the Nigerian market despite recording some setbacks after the first acquisition.