TIGER Brands advanced for a fifth day yesterday to the highest in more than a week after saying on Wednesday it had reached agreement in principle to buy a 63,4% stake in Dangote Flour Mills of Nigeria from Dangote Industries.
Shares in SA's biggest food company rose 1,9% to close at R255,50 yesterday.
Its acquisition target, Dangote, headed for its highest in more than a month yesterday, rising 4,9% to 6,24 naira in Lagos midday trading, the Nigerian commercial capital, set for the strongest close since May 30. The proposed deal has been submitted to Nigeria's Securities and Exchange Commission and the JSE for approval.
"The deal will give Dangote Flour an edge in terms of product acceptance and a wider business horizon," Eugene Ezenwa, chief operating officer of PAC Securities, a Lagos-based brokerage, said yesterday.
"It will help guarantee some level of foreign funding when the need arises, and also standardise the company's processes, and that's why investors are scrambling for the stock."
Dangote Flour Mills is listed on the Nigerian Stock Exchange, with 73,4% of the stock held by Dangote Industries, according to data compiled by Bloomberg.
Dangote Industries is closely held by Nigerian billionaire Aliko Dangote, who is also president of the Lagos-based Nigerian Stock Exchange.
Tiger Brands wanted to expand into Africa to increase revenue from its operations outside SA to 30% of total sales over the next five to 10 years as the home market slowed, CEO Peter Matlare said on May 22.
Tiger Brands has not yet made an offer price, saying on Wednesday a further announcement would be made in due course.