South African food company Tiger Brands has agreed to acquire a 63.4% stake in Dangote Flour Mills, a leading Nigerian manufacturer of pasta and flour, as part of its plan to strengthen its food business in the country.
In May 2012, Tiger Brands announced that it was in talks with Dangote Industries to acquire a stake in Dangote Flour Mills. The food companies have now submitted the proposal to Nigeria's Securities and Exchange Commission for approval.
Headquartered in Lagos, Nigeria, Dangote Flour Mills has a market capitalisation of about NGN24,800bn ($152m).
The company is a publicly-listed firm involved in milling, processing and marketing branded flour products, with 73.4% of the stock being held by Dangote Industries.
Dangote Flour Mills has a milling capacity of nearly 5,000t per day and offers confectionery flour, wheat flour, bread flour, pasta semolina, spaghetti and macaroni under the Dangote brand.
Tiger Brands, which produces bread, breakfast cereal and energy drinks, has been actively seeking to expand in Nigeria. In April 2010, it bought biscuit company Deli Foods Nigeria and in the same year it acquired a 49% equity stake in UAC Foods.
In May 2012, Tiger Brands CEO Peter Matlare said the company was planning to increase its sales from outside South Africa to 30%of the total revenue over the next five to ten years, due to the sluggish growth in the domestic market.
Dangote Industries, which is the personal investment vehicle of Nigerian businessman Aliko Dangote, also owns 90% of Dangote Cement, a leading producer of cement in Africa.
According to analysts, Aliko Dangote is divesting the flour milling division to focus on the cement business.