South Africa’s Tiger Brands is tired of losing money in its Nigerian venture, Tiger Branded Consumer Goods Plc of Nigeria (TBCG), formerly known as Dangote Flour Mills (DFM). The food company has not made money from the business since it acquired a 65.7 percent stake in DFM three years ago for $200 million.
The South African company is selling back the stake it acquired in the loss-making company back to Dangote Industries Limited (DIL), the initial owner at $1, although the Nigerian company will give Tiger Brands an immediate cash injection of R0.7 billion ($46.1 million). Tiger Brands will write off clear the unit’s debt of R0.4 billion. The transaction is subject to regulatory approvals.
In a statement in November, Tiger Brands had lamented underperformance in certain international operations, particularly the Nigerian unit, which led the Board of the company to initiate a strategic review of its Nigerian operations.
“After considerable and lengthy deliberations and consultation, and having explored several options, the Board took the decision not to advance any further funding to TBCG and to impair its investment,” the statement released on November 19, 2015, said.
The shares of TBCG , which fell 56 percent last year and had lost 75 percent of their value this year, rose to N1.26 in early trades upon news of a Dangote buyback.