Africa’s richest man Aliko Dangote is selling his loss making company, Dangote Flour Mills PLC (DFM) for the second time. This was made known in an announcement to the Nigerian stock Exchange (NSE) on Tuesday, April 23, 2019.
According to the notification sent to NSE, Dangote Flour mill received a binding offer from Olam International Limited, a Singaporean agro-allied company, in order to acquire all the outstanding and issued shares of DFM that are not currently owned by Olam through its subsidiary Crown Flour Mills Limited for N130 billion ($360.9 million). Although the transaction is subject to approval from the necessary authorities and shareholders. If this is successful the company will be delisted from the NSE.
The first time Dangote sold the company was in 2012. Amidst the turbulence facing the Nigerian stock market, Dangote was able to sell the company to South Africa’s Tiger Brands at the cost of $200 million in an investment the company unfortunately lost. In the deal, Tiger Brands received an immediate cash injection of $46.1million and took ownership of a debt of about $26.3 million. Three years after the acquisition, Tiger Brands sold its 65.7 percent stake in DFM back to Dangote at $1 per share which is lower than what it bought it for.
In 2015, Peter Matlare, CEO of Tiger Brands, admitted that his company failed in the assessment of the ways of doing business in Nigeria, as well as the competition in the country.
The company has been recording losses in DFM since 2012 when it recorded loss of $40.5 million while in 2014 it also reported a loss of $34.3 million. In its 2018 financial result published last month, Dangote Flour Mills Plc posted that it lost N1.2 billion due to several reasons which includes the disheartening Apapa gridlock and smuggling which has continuously hampered the growth of several businesses in Nigeria.
After the offer of the acquisition was announced on NSE the shares of DFM increased by 9.8 percent to N11.75.
Little wonder Aliko Dangote is not just the richest business man in Africa but also one of the smartest. He is a good example of a businessperson who knows how and when to take calculated risks. From the inception of his business, Dangote has shown his business acumen, creating a monopoly in the importation of consumable goods such as sugar and cement and now he is expanding to various regions in Africa.