TIGER Brands, South Africa's largest food producer, has reached an agreement in principle with Dangote, the West African manufacturing group, to purchase 63,35% of the Nigerian flour and pasta maker Dangote Flour Mills (DFM).
The transaction would expand Tiger Brands' presence in Nigeria. Last year, it bought 100% of Deli Foods Nigeria, a biscuit maker, for R296,3m. It also paid R421,1m for a 49% stake in UAC Foods Nigeria, a manufacturer of branded food products.
In May this year, Tiger Brands advised its shareholders it had entered talks with the Nigerian conglomerate over DFM.
The proposed transaction is subject to approval by Nigeria's Securities & Exchange Commission.
"Should the SEC approve the proposed transaction and its terms, the parties intend to sign the share sale and purchase agreement," the company said.
Tiger Brands said it would announce the full terms of transaction after the agreement had been signed.
It also said the implementation of the transaction would be subject to the fulfilment of certain conditions, including approval from the exchange control division of the Reserve Bank.
Tiger Brands spent R2,1bn on acquisitions last year, according to its annual report.