Dangote resigns as investor stops funding of Flour Mills

Foreign core investor in Dangote Flour Mills (DFM) Plc, Tiger Brands Limited- South Africa’s largest food company, has decided not to provide further financial support to the Nigerian company, which it has now rebranded as Tiger Branded Consumer Goods Plc.
Regulatory filing obtained by Ripples Nigeria showed that Tiger Brands Limited had informed the board of the newly renamed Tiger Branded Consumer Goods Plc that it “has reached a decision not to provide any further financial support with respect to its investment in Tiger Branded Consumer Goods Plc”.
The decision climaxed a long-running discontent between the core investor and the former core investor in the company, Alhaji Aliko Dangote. The Dangote Industries Limited (DIL) had in September 2012 sold 63.35 of its equity stake in DFM to Tiger Brands in a $181.9 million. 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 Share Sales Purchase Agreement (SSPA) however still provided for Dangote to retain his chairmanship of the board of DFM. According to the SSPA, DIL will retain a strategic interest of 10 per cent of the total issued ordinary share capital of DFM for a minimum period of five years after implementation of the transaction during which the Group will have the right to appoint two directors to the board of DFM, with Alhaji Aliko Dangote continuing as chairman of the company.
The decision by Tiger Brands Limited to cut off further funding for the lose-making subsidiary appeared to have triggered a major corporate crisis as Alhaji Aliko Dangote and his Nigerian team including Mr. Olakunle Alake, Mr. Asue Ighodalo and Mr. Arnold Ekpe resigned their appointments as directors of Tiger Branded Consumer Goods.

Read also: Dangote refinery begins operation in 2018

As at press time, the remaining members of the board of directors of Tiger Branded Consumer Foods were said to be considering the implications of the resignation of the Dangote team and other key decisions in order to make further decisions on the future of the Nigerian subsidiary.
Tiger Brands Limited was said to be exploring various alternatives with regard to its investment in Tiger Branded Consumer Goods as the South African firm struggles to stem the adverse impact of the Nigerian subsidiary on the group performance. Tiger Brands Limited had written off about half of its investment in DFM, less than two years after buying a majority stake in the Nigerian company. Tiger Brands stated that it decided to impair DFM’s value by 849 million rand, about $82 million, because of “underperformance”.
Dangote Flour Mills’ share price dropped by 4.74 per cent to close at N2.41 per share yesterday at the Nigerian Stock Exchange (NSE).
Shareholders were advised to exercise caution when dealing in the company’s shares until a further announcement on the corporate changes is made.

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