HARARE – South Africa’s largest food and consumer products company, Tiger Brands Limited (Tiger Brands) has acquired a 63 percent stake in Nigerian Dangote Flour Mills (DFM), as the company pursues organic growth.
The Johannesburg Stock Exchange-listed company, with direct and indirect interests in international food businesses in Cameroon, Chile, Kenya and Zimbabwe, said Nigerian authorities had cleared the R1,5 billion transaction.
In October last year, Tiger Brands raised its stake in Zimbabwe’s largest maize miller, National Foods Limited, to 37 percent after buying 11 percent from Innscor Africa Limited worth $11,7 million.
In a statement, Tiger Brands said it will soon be implementing the transaction with DFM, a market leader in the flour and pasta market segment of the Nigerian consumer food sector.
“Provided that there is no material adverse change as defined…, it is expected that the effective date of the transaction will occur as soon as practical after October 1, 2012,” the company said.
The transaction, Tiger Brands said, will add significant scale to its existing Nigerian businesses and represents a further important step in Tiger Brands’ expansion strategy on the balance of the African continent.
The South African firm said DFM will be its third, and largest, acquisition in Nigeria, following the acquisition of 100 percent of biscuit manufacturer, Deli Foods Nigeria Limited, in April 2011 and the acquisition of a 49 percent joint venture interest in UAC of Nigeria Plc’s food and beverage businesses in May 2011.
Nigeria is a key strategic growth market in West Africa, the second-largest African economy and one of the fastest growing economies in sub-Saharan Africa. With an estimated population in excess of 160 million and projected average real GDP growth forecast over the next three years of approximately seven percent per annum.
The deal is Tiger Brands’ third and the biggest yet in Nigeria, Africa’s most populous country and second-largest economy which is seen as a growth area for consumer and food products.
“Tiger Brands believes, particularly for consumer goods, that the potential of the Nigerian market is significant,” the company said.
In its unaudited results statement for the half year to March 2012, Tiger Brands reported a 12,1 percent growth in group turnover to R11,6 billion.
On a comparable basis, excluding acquisitions, turnover increased by five percent to R10,9 billion.
The group’s exports and international businesses performed strongly, growing turnover organically by 27 percent on the back of good volume growth and assisted by a weaker Rand exchange rate.
The new international acquisitions performed to expectations, contributing R690,6 million to group turnover.
Operating income before financing costs and abnormal items increased by 8,9 percent to R1,69 billion.
“Income from associates increased by 35 percent and includes the first time contribution from National Foods Holdings Limited whose results have been equity accounted with effect from October 1, 2011,” Tiger brands said.