Tiger Brands close to acquiring stake in Nigerian company

Tiger Brands have reached an agreement in principle, after much talk, to buy a 63.4 percent stake in Dangote Flour Mills from parent company Dangote Industries. Aliko Dangote, who is the richest fellow in Africa, is obviously getting the parent company to cash in here. Dangote is still the chairman of the Flour Mills business that has his name, but perhaps for not too much longer. As far as I understand it, Dangote Industrials will continue to hold a 10 percent stake in the business, should the deal be concluded. Now, as far as I can understand from the Bloomberg information on Dangote Flour Mills: Dangote Flour Mills PLC (DANGFLOU), the market cap is 29750 million Naira. Or 29.750 billion Naira.


Currency conversion time, officially one US Dollar is 162.8763 Naira, so this means that the whole business is worth 182.65 million Dollars. Which is roughly 1.48 billion Rands. And at the ruling price for Dangote Flour Mills, Tiger Brands would be paying 0.938 billion Rands, or 938 million Rands. Tiger Brands entire market cap is nearly 49 billion Rands, so this deal is worth roughly 2 percent of the market cap of Tiger. From their last set of numbers, West African sales were 336 million Rand, with EBIT of only 18 million Rands. This purchase (if closed) will raise West African sales significantly, in the 2011 financial year Dangote Flour reported sales of 66.281 billion Naira, or 3.3 billion Rands. So roughly 2.1 billion Rands, this is a significant jump in their presence in the region. The business that Tiger are buying into seems to have a creaking debt load, I am trying to find out more about that from a Nigerian source directly.