Dangote Industries acquires 65% of Tiger Brands Nigeria

Tiger Brands Ltd., South Africa’s largest food producer, agreed to sell its stake in loss making Nigerian business to Dangote Industries Ltd. 3 years after buying it.

Dangote will provide Tiger Branded Consumer Goods Plc of Nigeria with an immediate cash injection of 10 billion naira (US$50 million), with Tiger transferring its 65.7 percent stake for a nominal US$1, the Johannesburg-based company said in a statement Monday.

Tiger will assume and settle debt that it’s guaranteed for the West African business, amounting to 5.6 billion naira (US28 million), and will write off 700 million rand (US$46 million) of loans that it granted the operation.

Tiger last month wrote down the full value of Tiger Branded Consumer Goods, a separate business in the West African country, by 1.9 billion rand (US$125 million) . This added to previous impairments of 954 million rand (US$63 million) after Tiger bought the business for about 1.5 billion rand in 2012 (US$99 million).

Growth in Nigeria – Africa’s largest economy – has dropped to the slowest pace this decade following a plunge in prices for crude, its main export, while currency restrictions have added to unease among businesses and investors.

“Sufficient capital will be injected into Tiger Branded Consumer Goods in order to stabilize the business and place it on a sustainable path,” Tiger said. Dangote Industries is a subsidiary of the Dangote Group, founded and run by Nigerian billionaire Aliko Dangote.

Tiger rallied as much as 10 percent and was 5.8 percent higher at 308.90 rand by 9:38 a.m. (02:38 EST) in Johannesburg, paring the drop this year to 16 percent.

Source: Bloomberg Business