SA's Tiger Brands roars into acquisition mode
Cape Business News reports that in 2012, former CEO Peter Matlare led the acquisition of a 65.7 per cent stake in Nigeria’s Dangote Industries for R1.6bn ($117m), though successive losses prompted Tiger to sell the business back to tycoon Aliko Dangote for $1 in late 2015.
Tiger’s chief financial officer, Noel Doyle, said the group was pursuing bolt-on deals – “which we’ve generally executed quite well” – and larger opportunities at the right price.
“It’s just so tough to find value – seller expectations are still very high,” Doyle said. Tiger’s strong balance sheet meant it had “significant capacity” for takeovers, he said. It could “comfortably” take on another R7.5bn to R8bn ($500m appx) of debt.
“We’re starting to build a pipeline and we might have something to talk about at the half-year mark next year, but there’s no imminent transaction,” he said.
Tiger saw East Africa as an attractive market, Doyle said. It said it was selling its stationery and laundry-detergent operations in the region as they were noncore.
The group also planned to manufacture some of its South African “power brands” in other African states, partly in response to trade tariffs and a lack of foreign exchange liquidity in certain markets.
Doyle said that while Tiger was still deciding which brands to manufacture abroad, it wanted to build its presence in East Africa and Nigeria.
“Notwithstanding the political challenges in the short term [in East Africa], we still see that as an attractive region … for baby, homecare, some of our personal care brands, and potentially some of our breakfast brands.”
Investec analyst Anthony Geard said: “I’m sure there is scope to do more with South African brand icons in the rest of Africa, but caution seems to be the watchword for now and I can’t disagree with that.”
He did not expect “much anxiety about Tiger’s acquisition strategy – I think the company has learnt from its mistakes and is terrified of repeating them”, Geard said.
Michael Treherne, portfolio manager at Vestact, said while expanding into the rest of Africa was a good long-term strategy, “I would, however, like to see them move slowly” and do smaller deals.”Plus, the company now seems to be in good hands: new CEO MacDougall comes across very well and has been very clear that any acquisition will be executed within strict parameters,” he said.
Founded in 1921 by Jacob Frankel, with some help from Joffe Marks, Tiger Brands Limited – formerly known as Tiger Oats Limited – was built on the strength of family businesses and the spirit of entrepreneurship.
|Traded as||JSE: TBS|
|Headquarters||Bryanston, Gauteng, South Africa|
|South Africa and Selected Emerging Markets|
|Lawrence MacDougall (CEO) Noel Doyle(CFO)
Khotso Mokhele (Chairman)
|Products||Over one hundred covering a variety of packaged goods and foodstuffs.|
|Revenue||R31.73 Billion (FY 2016″‘)|
|R3.83 Billion (FY 2016″‘)|
Number of employees