News in Brief:
– Dangote’s plan to merge his sugar, salt, and rice businesses under one entity is on hold due to an SEC suspension over the non-operational status of Dangote Rice.
– The planned merger comes on the heels of competitor BUA Foods successfully consolidated its food businesses.
Africa’s richest man, Aliko Dangote’s plan to merge his sugar, salt, and rice businesses under a single entity has been suspended by the Nigerian Securities and Exchange Commission (SEC).
The SEC flagged the non-operational status of Dangote Rice Limited as a key roadblock to the merger’s approval and the companies need to address this issue before resubmitting their proposal.
The proposed merger, announced in July 2023, aimed to leverage economies of scale and create a stronger competitor in the food industry. If approved, both Dangote Sugar and Nascon Allied Industries, which processes raw salt, would delist from the Nigerian Stock Exchange before relisting under a new combined entity.
Meanwhile, this development comes after Dangote’s competitor, BUA Group, successfully consolidated its sugar, rice, and other food businesses into BUA Foods, which now boasts significant market value.
The SEC’s decision highlights the importance of regulatory compliance for mergers and acquisitions, even for large conglomerates like Dangote Industries. Consequently, the future of the proposed merger hinges on Dangote’s ability to address the SEC’s concerns regarding his rice business.
