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This is a short account of the activities that underpinned Dangote Flour Mills’ remarkable 288% share price rally in 2016. The precursor to this, was Tiger Brands’ disastrous investment in a couple of Nigerian FMCG companies.

Sometime in 2012 a South African Company named Tiger Brands decided to acquire Dangote Flour Mills from Alhaji Aliko Dangote. The company was performing poorly at the time.

The acquisition cost Tiger Brands about $182 million for 63% of the company. In 2013, they increased their stake to 70%, effectively becoming the owners of the company. The stock was trading at around N9.

After the acquisition, the owners implemented a series of strategies geared towards reversing the fortunes of the company. But things only went from bad to worse. By the end of 2013 the company’s losses ballooned to N7.2 billion. It reported 6.1 billion loss in 2013.

The South African investor, Tiger Brand didn’t see this coming. Tiger Brands acquired Dangote Flourmills in the hope that it will use its track record as South Africa’s largest consumer food maker to turn the loss-making company around.

Instead, it racked up billions in losses and was forced to mothball some of its mills. It soon changed the company’s name from Dangote Flourmills to Tiger Branded Nigeria Ltd. Unfortunately, a name change didn’t bring the change the market wanted to see.

Dangote Flourmills was not the only acquisition Tiger Brand made as part of its investment spree in Africa’s largest economy. Tiger Brands also invested in Deli Foods and UAC. But Tiger Branded, now Dangote Flourmills was the largest.

By the end of 2015, the share price of Tiger Branded Ltd had plummeted to N1.23 from N9 when it was increasing its acquisition to 70%.

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Tiger Brands is a classic example of how not to buy a Dangote Company.

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Sometime in November 2015, Aliko Dangote and three other directors resigned from the board of Dangote Flour Mills. The reason given was that the majority owner, Tiger Brands cut funding support to its struggling Nigerian division, Tiger Branded Nigeria Ltd. Alhaji Aliko Dangote owned about 10% of the company at the time!

Just 3 days later, Tiger Brands announced that it was taking a $120 million write off in its loss-making Nigeria unit.


Recall that they paid $200m for 70% just under two years prior. With $120 million lost the investors from South Africa had enough.

Dangote Flourmills was no MTN or DSTV. The business model was different. The then-outgoing CEO Peter Matlare Matlar reportedly said “We spent a bucket load of cash learning those lessons & shareholders are clearly upset,”

“We have to revise what the strategy should look like and that’s the work that is underway right now,” added Matlare,

He stepped down at the end of 2015 after eight years at the helm. The investment was a grave mistake. And by the way, the investment in Deli Foods (49%), makers of Digestive and Crackers also went awry. They had also written down N3.5 billion.


And then in December 2015, an interesting piece of news broke. Alike Dangote was buying back at $1, a company he sold for $200m!

Dangote Industries Limited (DIL) would provide Tiger Branded (TBCG) with an immediate cash injection of N10 billion. In return, Tiger Brands will divest its 65.7% shareholding in TBCG to DIL for a $1 and write off its shareholder loans to TBCG.

In addition, Tiger Brands will assume and settle outstanding debt guaranteed on behalf of TBCG. It didn’t end there…

Remember the Dangote directors that resigned from the board just a month prior? Well they were brought back in. The directors were Messrs Olakunle Alake, Arnold Ekpe and Asue Ighodalo

At the time the deal was concluded, Dangote Flourmill’s share price was just above N1. The stock had been seriously battered.

Amazingly, within 6 months of taking his company back, Dangote Flour Mills share price had risen from N1 to as high a N5.68. An almost 400% increase.

Tiger Brands got their fingers burnt, had their arms twisted and their butts gored all at the same time. It was a lesson for other South African companies looking to invest in Nigeria.

The murky waters of Nigeria’s consumer goods sector is not child’s play. Here, investors will get gored if they don’t know the ropes.

This was one of the most remarkable stories of 2016 in the Nigerian Stock Market and will be a case study to Foreign Direct Investment for years.



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