Dangote quits flour mill as Tiger Brands cuts funding

Lagos - Africa's richest man Aliko Dangote and three other directors resigned from the board of Dangote Flour Mills on Monday as majority owner Tiger Brands cut funding support to its struggling Nigerian division.

South Africa's Tiger Brands [JSE:TBS] said it was "currently exploring various alternatives with regard to its investment in Dangote Flour Mills, which also announced a change of name to Tiger Branded Consumer Goods.

Aliko Dangote holds 10% of the company's equity through Dangote Industries.

The other directors who resigned are Olakunle Alake, Asue Ighodalo and Arnold Ekpe.

Tiger Brands has struggled to make a profit at Dangote Flour Mills since paying nearly R2.87bn for a 65% stake in the firm three years ago as part of broader plan to expand elsewhere in Africa to offset slow growth at home.

But the flour mill is battling tough competition and a weakening naira currency, forcing Tiger Brands to twice write down the value of the business by a total of R954m.

"In the longer term, Nigeria will probably be a good place to be if you have scale, but Tiger Brands would probably have to refinance Dangote and probably take it a step forward by, for example, going into baking," said Avior Capital Markets' analyst Jiten Bechoo in Cape Town.
 
Tiger Brands' other businesses in Nigeria, Deli Foods and UAC Foods, will not be affected by the review. Tiger Brands competes with Nestle Nigeria in Africa's biggest economy.