Tiger Brands’ failed investment in Nigeria – who bears this loss?
With Multichoice, MTN, and Standard Bank owning significant shares of the Nigerian market in various sectors of the economy, the acquisition of a 63.5% stake in Dangote Flour Mills by Tiger Brands in 2012 appeared to be the ownership of a major Nigerian entity by yet another South African Company or was it?
Fast forward to 2015, Tiger Brands appears to be saying ‘here, you can have your company back for nothing’, giving up its entire 65.7% stake in the company for a nominal consideration of $1 back to Dangote. There has to be a catch somewhere or this is just a massive loss. What do the shareholders of Tiger brands in South Africa have to say about the wasted investment? Who bears this loss? Tiger Brands is not only giving up its entire stake for a nominal consideration, the company is also writing off shareholder loans and assuming specific debts of the company.
It’s taking a while for me to wrap my head around this. The announcement on the JSE implies that all of this is in exchange for the injection of 0.7 billion rand ($46.1 million) by Dangote into the Nigerian Company . But how does this injection profit Tiger Brands given its divestment? How do you pay $200Million for a company and sell it for $1 or better still $-0.4Billion Rand?
Both companies are publicly traded in South Africa and Nigeria respectively, but somehow I feel like there has been no full disclosure.
So who bears this colossal loss?