by Doyin Jaiyesimi
Business mogul, Aliko Dangote, has announced that he will sell his majority stake in Dangote Flour Mills to Tiger Brands, South Africa’s leading food company.
Dangote Flour Mills and Tiger brands began talks about the acquisition in May, where Tiger Brands made a bid for 80% stake currently held by Dangote Industries Limited (DIL); Dangote’s personal investment vehicle. Although the deal has not yet reached completion, Tiger Brands and Dangote Group have reached an agreement in principle for Tiger Brands to acquire 63.35% stake in Dangote Flour Mills.
Earlier today, Dangote Flour Mills released the following statement to the Nigerian Stock Exchange:
“Dangote Flour Mills (“DFM”) Plc has notified The Exchange that in furtherance to its earlier announcement, the company is aware that its majority shareholder Dangote Industries Limited (“DIL”) and Tiger Brands Limited (“Tiger”) have reached an agreement in principle regarding the terms of a potential transaction that would, if implemented, result in Tiger’s acquisition of 63.35% 0f DFM’s issued capital.”
The deal however is yet to be approved by the Nigerian Securities and Exchange Commission and Reserve Bank. Should the SEC approve the transaction, the parties intend to execute share sale and purchase agreement and the terms of the agreement will be publicly available. With the acquisition, Tiger Brands is poised to become a major player in Nigeria’s food and beverages industry.
This is in line with the company’s plans to aggressively increase its presence in the Nigerian shore. Earlier in 2010, it acquired Deli Food, one of Nigeria’s largest biscuit companies and a 49% stake in UAC Foods, Nigeria’s largest manufacturer of convenience foods. The in surge of South African companies in Nigeria should be a source of concern for local businesses that do not have the capacity to compete with these large companies. In the food and beverages industry in particular, they offer cheaper goods and large discounts which are a huge attraction for consumers.
Analysts believe that Dangote is looking to sell his majority stake in Dangote Flour Mills in order to “channel his energies towards growing and expanding his cement interests across sub-Saharan Africa.”
Not that this will affect that ‘richest man’ rating. The cement business takes care of that little matter.