Barely five years after BUA Group, Dangote’s fiercest rival consolidated its food businesses – rice, sugar, edible oils, and flour – into a new company known as BUA Foods, Dangote Group is on the verge of a similar business combination if only regulators and shareholders endorse the proposal.
The post-consolidation company going to be known as Dangote Sugar Refinery said in a corporate notification filed to the Nigerian Exchange today that the objective is to solidify and consolidate the market leadership position as well as improve returns to shareholders.
The notification filed and signed by Dangote Sugar Refinery Plc and its Company Secretary, Temitope Hassan, stated that “the Board of Directors of the Company at its meeting held on July 28, 2023, resolved to recommend the proposed merger between the Company, NASCON Allied Industries Plc, and Dangote Rice Limited to the Shareholders of the Company for consideration and approval, subject to parties agreeing to terms and conditions.”
The notification titled “Announcement Of The Proposed Merger Of Dangote Sugar Refinery Plc, Nascon Allied Industries Plc, And Dangote Rice Limited,” stated thus: “The Company will apply for the Securities and Exchange Commission’s approval of the Scheme, and other requisite approvals.
The Scheme is also subject to the approval of the Shareholders of the Merging Entities at the respective Court-Ordered Meetings of the companies, as well as the sanction of the Federal High Court.”
According to the corporate notice, the proposed merger will be an internal restructuring executed through a Scheme of Merger (“Scheme”), under Section 711 of the Companies & Allied Matters Act, 2020 (as amended) and other applicable rules and regulations.
On the benefits of the scheme, the company said it “expected that the Transaction will consolidate and solidify the Group’s market position and ultimately reposition the Group to harness future opportunities in the food industry.”
However, the company advised “shareholders to exercise caution when dealing with the shares,” promising that further details will be communicated to the market upon relevant approvals being obtained from shareholders and regulators.
It will be recalled that the BUA Group which has since listed on the Exchange consolidated its food businesses – rice, sugar, flour, edible oils, and flour – into a new company known as BUA Foods.
BUA Foods shares traded at N135.75 per unit as of Tuesday, August 1, 2023, is currently Nigeria’s biggest consumer goods company by market valuation of N2.443 trillion with about N649.6 billion in total assets.
In obvious competition, BUA Group Chairman, Abdul Samad Rabiu, also a multi-billionaire and one of Africa’s richest, is also building a refinery in Akwa Ibom State with a capacity to process 200,000 barrels of crude daily. Production is expected to commence in 2025, coming behind Dangote Group’s 650,000 barrels per day oil refinery in Lekki, Lagos, which was commissioned in May but has yet to refine a litre of petrol.
As to how much the shares of Dangote Sugar Refinery will be valued after consolidation, stockbrokers said they didn’t want to hazard any guess.
“The market will determine its value based on what fundamentals they are bringing on to the market. We can’t value the prospective stock out of a vacuum,” a senior dealing member of the Nigerian Exchange InsideBusinessNG on the basis of anonymity
