Tiger Brands in talks to acquire 80% stake in Dangote Flour Mills

South African food company Tiger Brands is in talks with Dangote Industries over the acquisition of an 80% stake in Dangote Flour Mills, a leading manufacturer of pasta and flour in Nigeria.

Dangote Flour Mills has a market capitalisation of NGN24,800bn ($157m) and the 80% stake is valued at nearly $125m. If Tiger Brands is successful in acquiring the stake, it would further strengthen its presence in the Nigerian food market.

While Tiger Brands did not disclose details of the negotiations, it asked investors to exercise caution in dealing with Tiger Brands shares until further announcements are made.

According to reports, Tiger Brands has already completed the evaluation of Dangote Flour Mills, and has hired FirstRand’s investment arm Rand Merchant Bank as its advisor.

Dangote Flour Mills, headquartered in Lagos, Nigeria, is a publicly-listed firm involved in milling, processing, and marketing branded flour products in the country.

It 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 into Nigeria. In May 2010, it purchased a 49% equity stake in Nigeria-based UAC Foods and bought the biscuit company Deli Foods Nigeria in April 2010.

Dangote Industries, which is the personal investment vehicle of the Nigerian businessman Aliko Dangote, also owns 90% of Dangote Cement, the leading producer of cement in Africa.

According to analysts, Aliko Dangote may be seeking to sell the flour milling division to focus on the cement business.