Dangote noodles business sale is a win for Africa’s richest man

Aliko Dangote is Africa’s smartest businessman and he has shown why this is so over and over again. Everything he touches turns to gold; those that are adamant, he sells. One of the great qualities of top CEOs is knowing the perfect time to buy and when to sell. The shrewd businessman has just sold his noodles business to the only competitor it failed to beat since he started business in the country; Dufil Prima Foods, makers of Indomie noodles.

From cement to salt, sugar and pasta, Dangote has always found a way to edge out competition. However, this became difficult in his flour business which has Dangote Agro sacks Limited, Dangote Pasta Limited and Dangote Noodles Limited as subsidiaries. The weak link in the company was always the noodles subsidiary, which never found a way to steal enough share of the market from Indomie. Dangote decided to sell Dangote Flour Mills to Tiger Brands Ltd., South Africa’s largest food producer, in 2012 but the company had to run back to Dangote three years later, saying it got it all wrong in the assessment of the ways of doing business in Nigeria, as well as the competition in the country (Dangote bought DFM back for $1). As it seemed, if Dangote cannot beat a competitor in Nigeria, no one can.

The richest man in Africa seemed to have realized this himself, hence the decision to throw in the towel. On Tuesday, Dangote Flour Mills announced the deal with Dufil, stating that it had exited its noodles business as it does not consider it strategic.

“The company has sold the assets of Dangote Noodles to Dufil Prima Foods, makers of Indomie noodles. To smoothen the transition, DFM has offered Dufil the use of some of its facilities on an interim basis,” a statement by Dangote said.

Group Managing Director, Dangote Flour Mills, Thabo Mabo explained that the deal was part of DFM’s strategies of focusing on flour and pasta production where the company has substantial market share.

Trust Dangote not to give up without showing he is still the boss: “Under the terms of sales agreement, Dufil Prima Foods, will continue to produce and sell noodles under the brand name, ‘Dangote Noodles’ for two years before changing the brand name,” Mabo added.

DFM’s FY 2016 results show that the company has returned to profitability after four years of losses. Profit after tax went up to N10.6 billion ($34.7 million) in contrast to a loss of N12.5 billion ($40.9 million) in 2015.