Nigerian conglomerate UACN Plc has signed an agreement to acquire the minority shares of its unlisted subsidiary UAC Foods from South Africa’s Tiger Brands next month.
The purchase is expected to be completed in September, UAC of Nigeria said in a filing published on the website of the Nigerian Exchange Group. UAC of Nigeria currently owns 51 percent of UAC Food’s shares.
Tiger Brands acquired a minority state in UAC Foods in 2011, following a joint venture agreement with the Nigerian firm to manufacture and distribute some sausage, ice cream and water brands.
The South African company decided to sell its 49 percent stake in UAC Foods Limited, one of the subsidiaries in UACN, 10 years after it first acquired the stake in the food and beverage business.
The 49 percent is a minority stake which gave Tiger Brands a license to produce and distribute selected products such as Gala sausage rolls, Supreme Ice Cream, and Swan water in Nigeria.
This is the second buyback deal involving Tiger Brands as the company had also sold its 67.5 percent in Dangote Flour Mills which was acquired in 2012.
This sale makes Tiger Brands the latest South African business to exit Nigeria, Africa’s most populous nation and largest economy, where economic weakness last year curbed consumer demand, input cost rises have cut into margins and currency volatility has further eroded profits.
It is exiting Nigeria about two months after another South African firm, Shoprite Holdings, sold its operations in the West African country to local investors.
UACN, with interests in real estate, paints and livestock feed, said it will operate Tiger Brands’ food company after the acquisition closes in September.
Tiger bought 49 percent of UAC’s food business in 2010 when Nigeria was touted as the next growth spot for retailers.
Recession in Nigeria in 2020 sapped demand, although the economy has recovered, growing 5.01 percent in the second quarter of this year.
Tiger Brands still operates in Cameroun, Ethiopia, Kenya, and Zimbabwe.