Dangote’s Bid To Merge Sugar, Salt, Rice Businesses Hits Brick Wall

The suspension “centred around the current non-operational status of Dangote Rice Limited” by the Securities and Exchange Commission (SEC), Nascon Allied Industries said.

The bid by Africa’s richest man, Aliko Dangote, to merge his sugar, salt and rice companies into one for improved efficiency and robust consolidation will not proceed for now.

Integrating the entities would have enabled Dangote Sugar, Nascon Allied Industries (already listed on the Nigerian Exchange (NGX) and the billionaire’s less-known rice company to leverage economy of scale as one business to gain higher access to capital and boost value.

But the move failed to meet a key requirement for the transaction to progress, Nascon Allied Industries said in a regulatory filing on Thursday.

The suspension “centred around the current non-operational status of Dangote Rice Limited” by the Securities and Exchange Commission (SEC), it added.

Nascon Allied Industries, which manufactures salt in addition to spices and seasoning, noted that SEC’s review came with comments and recommendations. It implies the three entities will return to the drawing board to put things right to continue getting final approval.

The proposal for the business combination was first announced last July, after which the parties to the merger presented the plan to shareholders for consideration. An acceptance of the terms and conditions by the merging entities later followed.

The companies are part of the much bigger Dangote Industries Limited, and Dangote Sugar has said the transaction aims “to consolidate and solidify the Group’s market position and ultimately reposition the Group to harness future opportunities in the foods industry.”

In December 2021, BUA Group – one of Dangote Industries’ biggest rivals in the cement and consumer goods sectors – consolidated its sugar, rice, flour, pasta and edible oils units into a single firm, later listing it on the NGX as BUA Foods.

Estimated at N720 billion at listing, BUA Foods’ is now worth N6.8 trillion in market value less than four years after.

If the three Dangote companies meet the conditions for approval and the transaction is completed, Dangote Sugar and Nascon Allied Industries will be delisted from the NGX.

Both companies, which at that point will have alternated with Dangote Rice, will be relisted on the stock exchange under a single name.