Tiger Brands Ltd., South Africa’s largest food producer said it won’t provide further financial assistance for its struggling Nigerian unit.
The maker of Jungle Oats and Black Cat peanut butter gained as much as 7.9 percent, the most since October 2008, and was up 7.5 percent at 334.37 rand by 2:07 p.m. in Johannesburg.
“Tiger Brands is currently exploring various alternatives with respect to its shareholding” in the Nigerian unit Dangote Flour Mills, the company said in a statement Monday.
It had warned investors in May the company may need to raise finance for Dangote through a sale of shares after writing down 954 million rand ($66 million). The food producer bought Lagos-based Dangote Flour Mills for about $150 million in 2012.
“The business has been losing a lot of money; there’s a lot of debt in Dangote Flour,” says Anthony Geard, an analyst at Investec Ltd. in Cape Town. “If Tiger walks away from it they’re walking away from a big liability and ongoing losses.”
Chief Executive Officer Peter Matlare said in September he would step down at the end of the year.