Dangote Is Not Only The Richest Man But Also The Smartest Man In Africa

According to media reports on Monday, South Africa’s Tiger Brands is selling its 65.7 percent stake in Flour Mills back to Aliko Dangote at $1 per share. 

This comes three years after the company acquired Flour Mills from Dangote at the cost of $200 million in an investment the company unfortunately lost. In the new deal, Tiger Brands will receive an immediate cash injection of $46.1million, taking ownership of a debt of about $26.3 million.

What you need to know about the deal between Tiger Brands and Dangote

On the 25th of September 2012, both companies announced that they had just concluded a transaction, which resulted in Tiger Brands acquiring a 63.35 percent shareholding in Dangote Flour Mills Plc for approximately R1.5billion. According to the agreement, Dangote retained a strategic interest of 10 percent in the company for a minimum period of five years, with Aliko Dangote continuing as Chairman of Dangote Flour Mills. Surprisingly, Standard Bank and ACL Capital Partners advised Tiger Brands on this deal.

Earlier this year, 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.

Months after the Nigerian acquisition, the South African company increased its stake to about 70 percent. However, in the first year after investing in this deal, Dangote Flour Mills reported a loss of $40.5 million while in 2014 it also reported a loss of $34.3 million.
Dangote Is Not Only The Richest Man But Also The Smartest Man In Africa
Why Dangote is the smartest businessman in Africa

No one in business ever makes a deal to record a loss but this what Tiger Brands is currently going through with the Flour Mills deal. Aliko Dangote is a good example of a businessperson who knows how and when to take calculated risks. From the inception, he has been smart creating a monopoly in the importation of consumable goods such as sugar and cement and now he is expanding to various regions in Africa.

In 2012, amidst turbulence in the Nigerian stock market, Dangote smartly sold a 63.35 percent stake in the Dangote Flour Mills Company to Tiger Brands for $200 million. Now, Dangote is offering to buy 67.5 percent of the company for an amount lower than what he sold it for in 2012 once again giving him full control of Flour Mills. This deal also see Dangote’s net worth, which fell to 14.7 billion in 2015 from $25 billion in 2014, increase again in 2016.

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