Tiger Brands on African expansion trail

26 November 2010

South African consumer goods and foods group Tiger Brands has taken the next step in its African expansion strategy, with the announcement of two investments in Nigeria and one in Ethiopia.

The acquisitions are expected to generate a combined annualised turnover of approximately R500-million in the first year.

Tiger Brands has signed an agreement with the East African Group plc to form a new food, household, personal care and cosmetics joint venture which will operate in the Ethiopian market. Tiger Brands will own 51% of the new company, with East African Group and its associates holding the remainder.

“Ethiopia, which has a population of approximately 85 million, has experienced high GDP growth rates for a number of years,” Tiger Brands said in a statement this week. “Most categories in the packaged consumer goods sector are enjoying good growth, stimulated by the fast growing economy.”

The principal activities of the joint venture will comprise the manufacture and marketing of various home and personal care products, biscuits, flour and pasta, which categories currently form part of the East African Group’s existing operations.

The East African Group is the largest manufacturer of detergents in Ethiopia, and this business will also form part of the joint venture.

Excellent growth opportunities

The second agreement relates to the purchase of the entire issued share capital of Deli Foods Nigeria Limited, a company engaged in manufacturing and marketing biscuits for the Nigerian market.

“With its large population and a strong and growing consumer market, Nigeria offers excellent growth opportunities for fast moving consumer goods companies,” Tiger Brands said. “The Deli Foods acquisition is therefore seen as a first step in entering this important market.”

According to the company, both acquisitions are subject to the fulfilment of various conditions precedent, including regulatory approvals where appropriate, and are expected to be completed in early 2011.

Private enterprise champion

In addition, Tiger Brands has also reached an agreement in principle with UAC of Nigeria plc, in terms of which Tiger Brands will acquire a 49% stake in the Nigerian food and beverage interests of UAC, which is listed on the Nigerian Stock Exchange.

UAC has been a leading private enterprise champion in the economic advancement of Nigeria and holds food interests primarily in the branded savoury, snacks, and dairy and beverage categories.

The acquisition specifically excludes the franchised quick service restaurants of UAC.

“Tiger Brands believes that the proposed transaction with UAC will provide the two partners with a sound strategic platform in Nigeria, which will benefit from the respective parties’ experience, skill and expertise in the manufacture, marketing and distribution of branded food and beverage products in emerging markets,” the company said.

All the transactions are subject to shareholder approvals from the respective companies, as well as approval from the respective regulatory authorities.

SAinfo reporter

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