The share price of Dangote Flour Mills soared by almost maximum 10% on Tuesday, April 23, 2019, following an announcement that its owners had reached a binding agreement to transfer it whole and entire (but without encumbrances) to Olam International, a commodity trading company of Singaporean origin (READ MORE).
Investdata Consulting Ltd, in the chart above, shows the price movement of DFM since October 14, 2012, when its owners- Dangote Industries Limited, the holding company of Alhaji Aliko Dangote, Africa’s richest man yet, sold 65% of its holdings to Tiger Brand at N9.50, retaining 10%.
It however repurchased (call it ‘re-acquired’) the company on February 24, 2016, at a paltry N1.24 after almost four years of posting losses, thereby making a kill, like every smart investor.
The company returned to profit again immediately Dangote Group took it over.
The directors rewarded shareholders with 20 kobo dividend per share after five years of waiting and hoping that things could, at least turnaround and their expectations met.
DFM is back to loss again, as shown in the 2018 full-year earnings score-card released earlier this month and it is being offered to Olam, a group known to be heavy investors in Nigeria’s agricultural value chain, at N26.00 per units, translating to N14.25 or 121.28% premium. The final price will, however, be subject to certain adjustments in line with the agreement.
Meanwhile, we watch to see where the announcement will take the share price before the cut-off date of the binding offer, just as investors would be interested in what adjustments will likely be made that will affect the share price and therefore, minority shareholders, in view of the no-excess baggage part of the clause.
CRO|Investdata Consulting Ltd
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