South African food firm Tiger Brands has withdrawn its financial support to its Nigerian arm Dangote Flour Mills (DFM), after it launched a review of its investment in the pasta and flour maker, which is struggling with losses.
Tiger Brands has been struggling to make profits at Dangote Flour Mills (DFM), which it bought for nearly $200m to acquire a 65% stake in 2012 as part of a strategic plan to expand elsewhere in Africa to counter slow growth rate at home front, Reuters Africa reported.
DFM has been struggling due to severe competition as well as devaluation of the Nigerian currency, forcing Tiger Brands to write down its value by $66.31m.
In its statement as reported by Reuters Africa, the company said: "Tiger Brands has decided not to provide further financial support with respect to its investment in Tiger Branded Consumer Goods plc of Nigeria."
Tiger Brands' other units in Nigeria such as Deli Foods, UAC Foods, will not be part of this review.
Separately, Dangote Flour has announced a name change to Tiger Branded Consumer Goods. The name change has been notified to Nigerian Stock Exchange.
The fund withdrawal by Tiger Brands resulted in a few senior position changes - Aliko Dangote resigned as the chairman, with Olakunle Alake, AsueIghodalo and Arnold Ekpe also quitting from their positions as directors.
Tiger Brands CEO Peter Matlare was quoted by thisdaylive.com as saying: "We are especially pleased with the successful conclusion of this transaction. We believe it will present growth opportunities for both organisations and be mutually beneficial. Dangote Flour Mills will add significant scale to Tiger Brands' existing Nigerian businesses."
Image: Tiger Brands reviews loss-making flour and pasta unit. Photo: Courtesy of Michelle Meiklejohn/FreeDigitalPhotos.net.
