The Chief Executive Officer of Dufil Prima Foods, Deepak Singhal described the deal as strategic to the company’s objective to gain prominence in the Nigerian noodles market.
Dangote Flour Mills Plc in a statement released on Tuesday, the subsidiary of Dangote Group said it no longer considered Dangote Noodles strategic to the company’s business growth.
Thabo Mabo, Group Managing Director of Dangote Flour Mills, described the deal, which became effective last week, as part of the company’s strategy to focus on key areas of flour and pasta production where it possesses substantial market shares. With the divestment from the noodles business, Mabo said Dangote Flour Mills can now focus on improving the quality, distribution, marketing and profitability of its flour and pasta products.
Dufil will continue to produce noodles under the Dangote Noodles brand name for a two-year period and also use the Dangote Flour Mills production line. The FMCG company will subsequently commence the use of its own brand name.
Dangote Group reacquired its flour business from Tiger Brand, South Africa’s largest food producer, in December 2015 following the divestment by the Johannesburg-based company due to the unprofitability of the business. Tiger Brands had paid $200 million for a 65 percent stake in Dangote Flour Mills in 2012, but it twice wrote down the value of the business by a total of $66.31 million. Tiger Brands attributed the losses to the devaluation of the naira, stiff competition, and slowing economic growth in Nigeria.