Dangote takes over Tiger Branded Consumer Goods

To revert to Dangote Flour Mills

Alhaji Aliko Dangote’s Dangote Industries Limited (DIL) has acquired 65.6 per cent majority equity stake in the former Dangote Flour Mills Plc, now rebranded Tiger Branded Consumer Goods (TBCG) Plc, from Tiger Brands Limited, the South African core investors.

A cross deal for the transfer of more than 3.28 billion ordinary shares of 50 kobo each of TBCG from Tiger Brands Limited to DIL was struck on Monday at the Nigerian Stock Exchange (NSE). The cross deal was struck through the negotiated cross deal window of the NSE at N1.24 per share.

The negotiated cross deal implies that the buyer and the seller had agreed on the transaction and came to the stock market for formalization of the transaction. Negotiated window at the Exchange is usually used for large-volume and block divestment and it allows the consummated price and charges to be lower than the prevailing market rates.

TBCG’s issued share capital currently stands at five billion shares, indicating that the transferred 3.28 billion shares represents 65.6 per cent of the current issued share capital.

The Nation two weeks ago exclusively reported approval of the acquisition by Nigerian and South Africa authorities.

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 reached agreement with DIL on December 11, 2015 to resell the troubled flour-milling company to DIL.

Sources had confirmed to The Nation that the Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator; Nigerian Stock Exchange (NSE), where TBCG is listed and all necessary South African regulatory agencies have approved the deal.

The Nation had reported that the transfer of the shares of TBCG from Tiger Brands to DIL would soon be done through the negotiated cross over window of the Nigerian Stock Exchange (NSE). The transfer of shares would subsequently be followed by the return of the company to its former name, which many stakeholders consider to be a stronger brand than the current name. 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.

The Nation in late December 2015 also exclusively reported the details of the acquisition deal. Under the deal, Tiger Brands Limited, South Africa’s largest food company, would divest its shareholding to Dangote Industries Limited (DIL), the holding company of Africa’s richest man, Alhaji Aliko Dangote.

A report obtained by The Nation, which outlined the key details of the Share Sale Purchase Agreement (SSPA), 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.

It was the first report to outline the key financial considerations of the acquisition. TBCG has five billion ordinary shares of 50 kobo each with market capitalisation of about N5.9 billion.

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.

“Tiger Brands Limited will transfer/sell its shares (3,283,277,052) to Dangote Industries Limited for a nominal amount ($1) in consideration for Dangote Industries Limited injecting N10 billion in January in the form of a convertible (at lender’s option) shareholders’ loan,” according to the report.

Besides, “Tiger Brands Limited’s loan to TBCG of N10.25 billion will be extinguished by way of debt forgiveness to the company” and “Tiger Brands Limited will assume the Stanbic IBTC debt of N5.51 billion and pay up the outstanding amount due to the bank”.

-thenationonlineng

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