Tiger Brands, a major South African food company, has announced that it is holding talks with the Dangote Group on investment matters.

Specifically, the company explained that it had been holding discussions with Dangote Industries over its stake in Dangote Flour Mills Plc.

The talks, according to Reuters on Monday, are coming amid reports that Tiger Brands is bidding for an 80 per cent stake in Dangote Flour Mills, which makes pasta and flour in Nigeria.

Lately, there have been increased activities in the shares of Dangote FlourMills, as its shares jumped by 4.64 per cent to N4.96, representing its highest level in more than six weeks. Tiger Brands was little changed at 288.21 rand.

Tiger Brands did not, however, give further details, saying developments would be reported to shareholders.

Reuters

reported that buying all or part of Dangote Flour Mills would give Tiger Brands a substantial presence in the Nigerian food market.

Dangote has the milling capacity of 4,800 metric tonnes per day, producing wheat flour, confectionary flour, bread flour and pasta semolina

Banking and company sources told Reuters that Tiger Brands has already done a due diligence and FirstRand’s investment arm Rand Merchant Bank is its advisor.

Tiger Brands spent $270m buying stakes in companies outside South Africa in the 12 months through September.

In April 2011, it acquired all the shares in biscuit maker Deli Foods Nigeria Limited and this year promoted the managing executive of its grain division, Mr. Thabi Segoale, to head its Nigerian business.

Tiger Brands had about a year ago, signed an agreement with UAC of Nigeria Plc on their strategic partnership and formed the new UAC Foods Limited.

The transaction, which was approved by UAC shareholders at their Extraordinary General Meeting in 2010 and by the regulatory authorities, was aimed at strengthening the packaged snacks, dairies and bottled water categories of UAC’s portfolio of brands.

Speaking on the deal, the Group Managing Director/CEO of UAC of Nigeria Plc,Mr. Larry Ettah, had said, “The strategic merits of this alliance ensures best immediate and long term value for UACN shareholders and the company itself. It preserves our strong iconic brands, category focus and provides strong delivery capability for growth and innovation.”

“The terms negotiated are fair, reasonable and in the best interest of our shareholders having taken into consideration the commercial assessment of UACN Directors. Our customers, employees and other stakeholders will benefit from the enlarged reach, size and competitiveness of the new UAC Foods Limited.’’

The strategic partnership involved three of UACN’s businesses in the snacks,dairies and bottled water categories – UAC Foods, UAC Dairies and Spring Waters Nigeria Limited, while the product of this transaction is the new UAC Foods Limited.

Source: Punch