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South Africa’s Tiger Brands exits Nigeria market as UAC takes over 49% stake in food subsidiary

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Nigerian conglomerate UAC 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 company said in a regulatory filing.

The 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.

UAC, 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.

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“UAC of Nigeria PLC (UACN) hereby announces that it has signed a binding agreement to acquire Tiger Brands Limited’s minority shareholding in UAC Foods Limited (UAC Foods).

“UAC Foods is a majority owned subsidiary of UACN operating in the packaged food and beverages industry.

“Upon completion of the purchase, UAC Foods will continue to operate as a subsidiary of UACN providing nutrition to millions of Nigerians.

“The purchase is expected to be completed in September 2021,” the local conglomerate said in the filing with the Nigerian Exchange Group (NGX).

Other South African companies that expanded into Nigeria and have since decided to leave are Shoprite and Massmart .

Recession in Nigeria in 2020 sapped demand, although the economy has recovered, growing 5% in the second quarter of this year.

In 2012, Tiger Brands purchased a majority stake of about 67.5 percent in Dangote Flour Mills worth almost $200 million.

Three down the line, the company sold it stake back to the DFM and wrote down $76 million worth of loans it granted to the company.

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