Tiger Brands Ltd., South Africa’s largest food company, will write off about half of its investment in Dangote Flour Mills Plc less than two years after buying a majority stake in the Nigeria-based producer.
Tiger, which makes Jungle Oats and All Gold tomato sauce, will impair Dangote Flour’s value by 849 million rand ($82 million) because of “underperformance” and “excess milling capacity that continues to increase in the Nigerian flour market,” the Johannesburg-based company said today.
The company bought a 63.5 percent stake Dangote Flour Mills from Dangote Industries Ltd. in September 2012 for about $190 million, its third purchase in Nigeria. Tiger targeted acquisitions in Africa’s largest economy as it saw limited opportunities in its home market.
The food producer sees earnings per share for the six months ended March 31 falling as much as 55 percent from a year earlier because of the write-off, it said in a statement. Excluding the impairment, profit from continuing operations will improve 6 percent to 10 percent, Tiger said.
Tiger rose 3.9 percent, the most since May 31, to 287.67 rand by the close in Johannesburg.