Setback for Dangote as Merger of Sugar, Salt, Rice Companies Hits Roadblock

Setback for Dangote as Merger of Sugar, Salt, Rice Companies Hits Roadblock

  • Nascon's proposed merger with Dangote Sugar Refinery has been suspended due to regulatory brickwall
  • The companies owned by Africa's richest man, Aliko Dangote, initially hinted about the merger in the third quarter of 2023
  • According to the parent company, the merger is expected to reposition it to harness future opportunities in the food industry journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.

Africa's wealthiest man, Aliko Dangote, has temporarily halted his plan to merge his sugar, salt, and rice companies to enhance efficiency and strengthen consolidation.

This is according to a notification signed by Nascon Allied Industries' company secretary, A.A. Samuel, and published by the Nigerian Exchange Limited.

Dangote's mega merger plan hits regulatory roadblock
According to reports, the proposal did not meet a crucial requirement for the transaction to proceed. Photo credit - Dangote Industries
Source: UGC

Consolidation plan stalled by SEC

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The integration of these entities would have allowed Dangote Sugar, Nascon Allied Industries (already listed on the Nigerian Exchange), and the billionaire's lesser-known rice company to benefit from economies of scale, thereby increasing access to capital and enhancing overall value.

However, the proposal did not meet a crucial requirement for the transaction to proceed, as stated in a regulatory filing by Nascon Allied Industries.

Nascon Allied Industries, known for its production of salt, spices, and seasoning, indicated that the Securities and Exchange Commission (SEC) review included feedback and suggestions.

The statement part read:

"The suspension is due to the comments and recommendation of the Securities and Exchange Commission (“SEC”) centered around the current non-operational status of Dangote Rice Limited."

This suggests that the three entities will need to reassess their plans in order to address these comments and recommendations to proceed with final approval.

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Merger to consolidate Dangote's position in food industry

The proposal for merging the businesses was initially announced in 2023, following which the merging parties presented the plan to shareholders for consideration.

These companies are subsidiaries of the larger Dangote Industries Limited.

Dangote Sugar states that the transaction aims to consolidate and strengthen the Group's market position, ultimately positioning it to seize future opportunities in the food industry.

Should the three Dangote companies satisfy the approval conditions and finalize the transaction, Dangote Sugar and Nascon Allied Industries will be delisted from the NGX.

At that stage, both companies, alongside Dangote Rice, will be relisted on the stock exchange under a unified name.

Dangote Sugar employs 7,000 annually

In related news, reported that no fewer than 7,000 people are employed annually at Dangote Sugar Refinery in Numan, Adamawa State, courtesy of the Backward Integration Project (BIP).

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Bello Dan-Musa, group general manager of operations for the company, disclosed this during a media tour of the facility in Numan.

Dan-Musa said thousands of young people work for the company directly while more than 7,000 people were employed at its busiest point during the production season.


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