Tiger Brands, that purchase announcement from yesterday, the purchase consideration is even higher than I initially thought. The total purchase consideration by Tiger of Dangote Flour Mills shall not exceed 4.1 billion Rands. That is the maximum that they are going to pay. The initial 1.5 billion Rands stands, and THEN on top of that, Tiger are going to pay 14 times the current years adjusted profits after tax (according to a pre determined formula) for the current financial year for DFM which ends on the last day of the year. Their share at least, 63.35 percent.
All you need to understand is that they will not pay more than 4.1 billion Rands, which in itself is a hefty amount, whichever way that you look at it. But it turns out that the chances of them paying that much are remote, in order for Tiger to start paying Dangote Industries more money (than the 1.5 billion Rands), Dangote Flour Mills would have to increase their "audited profits after tax" by more than 73 percent. And in order to get to the 4.1 billion Rand mark, on the same measurement, profits after tax would have to increase by 374 percent on last year, 2011. Seems funny, but I guess all parties have had a chance to check this out and would be comfortable with this agreed formula.