By Goddy Egene
Strong indications have emerged that Tiger Brands of South Africa, which bought 63.3 per cent stake in Dangote Flour Mills Plc last week, may also buy off the other minority shareholders in the company.
Dangote Industries Limited (DIL) had last week concluded the sale of 63.3 per cent of its stake in DFM to Tiger Brands and is now retaining only 10 per cent. The remaining 26.7 per cent stake is in the hands of diversified minority Nigerian shareholders.
However, competent stock market sources told THISDAY that Tiger Brands might make a tender offer to shareholders to buy off their 26.7 per cent. “We see a tender offer coming but we cannot say the exact time. However, it is very certain that Tiger Brands would want to settle the minority shareholders and be in total control of DFM,” a market source said.
Tiger Brands’ acquisition of 63.3 per cent of DFM was consummated on the floor of the Nigerian Stock Exchange (NSE) last week when 3.16 billion units of ordinary shares were bought at a premium price of N9.50.
According to the South African firm, the transaction would substantially add scale to its existing Nigerian businesses and strategically position the company to take advantage of the market opportunities within the Nigerian milling sector and related essential food categories.
DFM is Tiger Brands’ third and largest acquisition in Nigeria, following the acquisition of 100 per cent of biscuit manufacturer, Deli Foods Nigeria Limited and the acquisition of a 49 per cent joint venture interest in UAC of Nigeria Plc’s food and beverage businesses in 2011. The company is the largest food company in the continent’s largest economy, South Africa and has presence in Cameroun, Kenya, Chile and now Nigeria.
Assessing the impact of the acquisition of DFM on Tiger Brand’s operations, analysts at Meristem Securities Limited said they expected it to add N67 billion to the 2012 of the South African firm.
According to them, although DFM witnessed significant year-on-year (YoY) decline of two per cent and 75 per cent in turnover and profit after tax for 2011 financial year, they are optimistic that Tiger Brand’s regional market presence, cost efficiency and scale economics would positively impact on the profitability DFM.
Despite the reduction in his stake to 10 per cent, Alhaji Aliko Dangote would remain as chairman of the DFM. The management of DIL said the decision to divest is in furtherance of its ongoing optimisation/diversification objective.