Tiger Brands has exited Nigeria after selling its minority stake in UAC Foods, becoming the latest SA company to pull out of the West African nation, a potentially lucrative market, which has been criticised as being hostile to foreign capital.
For Tiger Brands, the exit marks the end of the journey that started a decade ago with the acquisition of Deli Foods. Updating the market on Monday, Tiger Brands said it was selling its 49% interest in the food, dairy and beverage company back to its parent, UAC of Nigeria, which holds the 51% balance.
“An exit from Nigeria would allow Tiger Brands to focus on its core SA operations. The Nigerian regulator has not been friendly to foreign investment; this divestment will allow the group to reduce their regulatory and currency risk in the region,” said Sonam Ramlal, a portfolio manager at the Robert Group.
The deal, which is expected to close on Wednesday, will not have a material impact on Tiger’s headline earnings, the company said in a statement.
Tiger Brands shares were little changed at R184.14 in midafternoon trade on the JSE on Monday, valuing the company at R34.8bn.
In 2015, Tiger Brands sold its 65.7% stake in a Nigerian loss-making flour business back to Dangote Industries for a nominal $1, having paid $200m for it in 2012.
“While Nigeria has potential, this has not translated into actual returns for SA companies and shareholders,” said Rowan Williams, portfolio manager at Nitrogen Fund Managers.
In June, Shoprite completed its exit from Nigeria, following in the footsteps of Mr Price, Woolworths and Massmart, all of which have left the country. SA companies have cited a difficult market in which to operate amid oil price and currency volatility and difficulties in repatriating funds.
DStv operator MultiChoice is disputing the manner in which the Nigerian tax authorities want it to settle its tax bill in that country. Last week, a Nigerian tax tribunal ordered MultiChoice’s Nigeria business to pay 50% of a disputed 1.8-trillion naira ($4.38bn) tax bill relating to previous years. The news sent the share price down 7% on the JSE before it recovered.
MTN, Africa’s largest mobile operator, was also caught up in the regulatory scrutiny in 2015 when it was fined $3.9bn for missing a deadline to disconnect unregistered subscribers.
Standard Bank, the continent’s largest lender, also found itself in trouble with the regulator, which accused it of breaking the law in helping MTN send money out of Nigeria.
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