Dangote Flour Mills Plc, a Nigerian producer, headed for its highest in more than a month after Tiger Brands Ltd. of South Africa agreed to take a majority stake in the miller.
The stock rose 4.9 percent to 6.24 naira as of 12:15 p.m. in Lagos, the commercial capital, set for the strongest close since May 30.
Tiger Brands, South Africa’s largest food company, has reached agreement in principle to buy a 63.4 percent stake in Dangote Flour from Dangote Industries Ltd. the Johannesburg-based company said yesterday. The proposed deal has been submitted to Nigeria’s Securities and Exchange Commission for approval, according to a joint statement to South Africa’s bourse, where Tiger Brands is listed.
“The deal will give Dangote Flour an edge in terms of product acceptance and a wider business horizon,” Eugene Ezenwa, chief operating officer of PAC Securities Ltd., a Lagos-based brokerage, said by phone today. “It will help guarantee some level of foreign funding when the need arises, and also standardize the company’s processes, and that’s why investors are scrambling for the stock.”
Dangote Flour Mills is listed on the Nigerian Stock Exchange, with 73.4 percent of the stock held by Dangote Industries, according to data compiled by Bloomberg. Dangote Industries is closely held by Nigerian billionaire Aliko Dangote, who is also president of the Lagos-based Nigerian Stock Exchange.
Tiger Brands wants to expand into Africa to increase revenue from its operations outside South Africa to 30 percent of total sales over the next five to 10 years as the home market slows, Chief Executive Officer Peter Matlare said on May 22
Dangote Flour shares have risen 25 percent this year, compared with a 6 percent gain in the Nigerian Stock Exchange All-Share Index.