Nigerians in talks with Tiger Brands
Business Day - May 8th 2012, 08:39
Tiger Brands yesterday confirmed it was in talks with Nigeriaâ€™s flour milling company Dangote Flour, a deal that one analyst said could be valued at at least $150m if 80% of the shares were acquired at the market capitalisation of the Nigerian company.
A successful acquisition will give Tiger Brands an opportunity to broaden its presence in the food market of Africaâ€™s most populous country. Dangote Flour is one of the top 10 food and beverage companies listed on the Nigerian Stock Exchange.
"Speculation is that 80% of the shares are available of a company with a market capitalisation of $151m as of Friday," one Johannesburg-based analyst said.
"Dangote Flour will add to Tiger Brandsâ€™ portfolio in Nigeria. Itâ€™s part of their overall strategy to grow in Africa."
Tiger Brandsâ€™ planned acquisition comes at a time when Dangote Flour shares have tanked from a 52-week high of 19,83 naira which it hit on May 9 last year.
Dangote Flour closed up 0,22% to 4,96 naira on the Nigerian Stock Exchange yesterday, not far from the 52-week low of 3,80 naira it hit on February 17.
As of yesterday its market capitalisation was at about 24800-billion naira ($157m). In the year to date Dangote Flourâ€™s share price has fallen by 0,8%.
The news of talks with Dangote Flour come just after Tiger Brands elevated its grain division executive Thabi Segoale to head up its Nigerian interests. Tiger Brands group secretary Ian Isdale said last month that the company was of the view that it could not have wider African aspirations without a focus on Nigeria.
Last year, Tiger Brands bought 100% of Deli Foods Nigeria, a biscuit maker, for R296,3m. It later paid R421,1m for a 49% stake in UAC Foods Nigeria, a manufacturer of branded food products. Tiger Brands spent R2,1bn in total on acquisitions last year, its annual report shows.
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