Dangote acquires former Dangote Flour Mills from SA investors

Alhaji Aliko Dangote has finally succeeded in his bid to repurchase the majority equity stake in the former Dangote Flour Mills Plc, now rebranded Tiger Branded Consumer Goods Plc.

A cross deal for the transfer of more than 3.28 billion ordinary shares of 50 kobo each of Tiger Branded Consumer Goods (TBCG) Plc from Tiger Brands Limited to Alhaji Aliko Dangote’s Dangote Industries Limited (DIL) was effected on Monday at the Nigerian Stock Exchange (NSE).

While the deal was crossed at the existing market price of N1.24 per share, the NSE authorities termed it as a negotiated cross deal, which means that the buyer and the seller had pre-arranged the transaction and the purchase price and charges could be lower. The transaction was also regarded as a block divestment, implying the change in majority equity holding.

The transferred 3.28 billion shares represent 65.6 per cent of the current issued share capital of TBCG.

Dangote Group’s DIL had in 2012 sold 63.35 of its equity stake in DFM to Tiger Brands in a $181.9 million deal. The deal saw transfer of 3.17 billion ordinary shares out of Dangote Group’s 3.67 billion ordinary shares of 50 kobo each in DFM to the Tigers Brand. The deal then was approximately valued at more than N28 billion, according to prevailing exchange rate.

After nearly four years of successive losses and impairing of assets, Tiger Brands, South Africa’s largest food company, reached agreement with DIL on December 11, 2015 to resell the troubled flour-milling company to DIL.
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A report had last week indicated that all was set for the return of former TBCG to Dangote following the approval of the deal between TBCG’s majority core investor, South Africa’s Tiger Brand and the second major shareholder, DIL to sell Tiger Brands’ majority equity stake to DIL by Nigerian and South African authorities.

The Dangote Group is the most capitalised quoted business group in Nigeria with four major companies including Dangote Cement, cement; Nascon Allied Industry, salt; Dangote Sugar Refinery, sugar; and TBCG, flour. It has several unquoted subsidiaries that are involved oil and gas, telecommunications, fruit drinks and transportation among others.

A report had earlier outlined the key details of the Share Sale Purchase Agreement (SSPA) that indicated that Tiger Brands will transfer and sell its 65.66 per cent majority equity stake in TBCG to DIL for a nominal consideration of $1. The South African majority core investor will also absorb N15.76 billion in debts.

In consideration for the transfer of the 65.66 per cent equity stake to DIL, DIL will inject N10 billion in form of a convertible shareholder’s loan into TBCG in January 2016. The convertible loan implies that DIL, at its option, will automatically have higher majority equity stake whenever it decides to exercise its convertible option.

It should be recalled that Tiger Brands, which recently renamed the former DFM as TBCG, had in November 2015 announced that it would no longer extend funding to the struggling Nigerian subsidiary, in a major boardroom crisis that saw the exit of Alhaji Aliko Dangote and other Nigerian directors loyal to him from the board of TBCG.
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