South Africa’s Tiger Brands drops bid for Kenyan miller
A woman shops for flour at a Nyeri town supermarket. Tiger Brands is keen on the flour milling sector. Photo/FILE
What you need to know:
Tiger Brands has dropped its bid to acquire Rafiki Millers and Magic Oven Bakeries buyout following sharp differences on the valuation of the business.
The collapse of the deal will delay the company’s efforts to diversify its product range and replicate the South African model where it is involved in flour milling, bakery and breakfast cereals.
South Africa’s Tiger Brands has ditched its bid to acquire a Kenyan flour miller and bakery for Sh2.1 billion following sharp differences on the valuation of the business.
The Johannesburg Stock Exchange-listed firm pulled the plug on the Rafiki Millers and Magic Oven Bakeries buyout a month after the competition watchdog cleared the takeover.
Tiger had then reported it was scouting for fresh buyout deals. The collapse of the deal will be a blow for Tiger Brands — which owns a 51 per cent stake in Haco Industries — delaying the company’s efforts to diversify its product range and replicate the South African model where it is involved in flour milling, bakery and breakfast cereals.
“There was a divergence of opinion on matters relating to the closing of the transaction and the parties mutually agreed to cancel the transaction,” Tiger Brands said in a statement.
“We remain open to appropriate opportunities in Kenya and East Africa.” Tiger Brands’ interest in Kenya’s bakery market is meant to tap into the region’s growing middle class and its increased spending on breakfast and pastries.
The company is a maker of bread, breakfast cereals and energy drinks as well as personal care and household products such as body cream, deodorants, shampoos, air fresheners, bleach, and mosquito repellents.
Private equity firm Fusion Capital last week injected Sh245 million in the acquisition of a 45 per cent stake in GAL Baking Services, highlighting the increasing interest in Kenya’s bakery and milling industry.
Tiger Brands reckons the fast growing urbanisation and changing lifestyles in Kenya have created demand for breakfast cereals and bakery products such as baguettes, crumpets and croissants.
Analysts at Standard Investment Bank (SIB) said Tiger Brands’ acquisition of Rafiki unravelled after owners of the Kenyan business demanded a bigger deal.
“South Africa’s Tiger Brands withdrew from discussions to buy Rafiki Millers and Magic Oven Bakeries following what is thought to be high asking prices,” SIB said in a research note.
“Delay in the transaction suggests that valuations may also be generous.”
Tiger Brands disclosed in its 2013 annual report that it was in talks to acquire Rafiki Mills and Magic Oven in a deal valued at $25 million (Sh2.15 billion).
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