South African food producer Tiger Brands said on Thursday it has sold its 51 percent stake in an Ethiopian business for an undisclosed amount to other shareholders.
“The board of directors of Tiger Brands has decided to dispose of the company’s 51 percent stake in its Ethiopian business, EATBI (East Africa Tiger Brands Industries), to its partner EAG (East Africa Group), which holds the remaining 49 percent,” Tiger Brands said in a statement, Reuters reported.
Tiger Brands said joint-venture partner East Africa Group offered to buy the stake of East Africa Tiger Brands Industries “at a price that was considered fair and reasonable,” BusinessDayLive reported.
The sale of Tiger Brands’ Ethiopian subsidiary follows the sale of its Nigerian business, Tiger Branded Consumer Goods, in February to Dangote Industries for about $47.179 million US.
Tiger Brands still has interests in Nigeria through Deli Foods. In divesting from Nigeria, the company said it was facing a tough economic environment as Nigerians’ disposable incomes faced increasing pressure. The company said it had been hurt by the naira devaluation.
“Ethiopia remains a market of significant potential and options will be explored to maximize opportunities in relevant product categories,” Tiger Brands said in a statement.
In 2015, U.K.-based investment firm Vasari Global invested $36 million into Ahadukes, an Ethiopian food manufacturer aiming to sell on the local market.
Vasari worked with local businessman Solomon Wondimneh to set up their first factory through a joint venture in May 2015 with their eyes on the wider East African market, according to TheAfricaReport.
Ultimately the partners said they want to supply the East African market and provide much-needed foreign exchange for Ethiopia.
Vasari Global said it planned to increase its investment to $120 million as new lines like pasta were added to the biscuits currently coming out of its Ethiopian processing facility.
In the production of pasta, biscuits and other fast-moving consumer goods, Ahadukes faced competition from Tiger Brands.
Vasari has invested in two other projects in Ethiopia – the Dashen Brewery and Rorank Business, a new spirits distillery – both of which are planning expansions.
East African Tiger Brands Industries was founded in 2010 as a joint venture by South Africa’s Tiger Brands and local company East African Holding. The company dealt in food, household goods, personal care and cosmetics.
In 2010, Tiger Brands was in African expansion mode, making two investments in Nigeria and one in Ethiopia, SouthAfrica.info reported.
In Ethiopia, the main activities of the business included manufacturing and marketing home and personal care products, biscuits, flour and pasta — categories that formed part of the East African Group’s existing operations.
The East African Group was the largest manufacturer of detergents in Ethiopia at the time, and this business also formed part of the joint venture.
In its interim results released in May 2016, Tiger Brands combined Kenya-based Haco and East Africa Tiger Brands Industries into its East Africa segment. Their combined turnover was $34.7 million US with $2.4 million profit for the six months ending in March, BusinessDayLive reported.
“Both of the East African businesses, Kenyan-based Haco and Ethiopian-based East Africa Tiger Brands Industries reported strong volume growth during the period. Following last year’s losses, Haco achieved a profit turnaround while EATBI improved its operating performance in a difficult macro-economic environment,” Tiger Brands said in its interim results statement.
