De United Foods Industries, a subsidiary of Dufil Prima Foods, has consolidated its hold in the Nigerian noodles market with the recent acquisition of two production lines in Ikorodu, Lagos, and Calabar, Cross River State, belonging to rival Dangote Noodles Limited, a unit of Dangote Flour Mills for N3.75bn.
The deal, which is in line with plans by Dangote Flour’s majority owner- Alhaji Aliko Dangote to quit the noodles business to focus on flour and pasta production, Reuters quoted analysts as saying, De United would also buy stock worth N383.94m.
The deal comes after Dangote sold a small stake in its cement business to foreign investors in a one-off stock market deal valued at N27bn.
Nigeria’s noodle market is fiercely competitive and De United with a market share of around 70% is seeking to consolidate the sector, which may be a major reason for the exit by Dangote, who always works to rank number one or worst case scenario, number two in any sector it plays in.
Privately-held Dangote Industries Limited, with interests in agriculture, real estate and truck assembly, bought back the flour unit it had sold to South Africa’s Tiger Brand for $1 in 2015 after it posted losses.
Dufil Prima Foods, the parent of De United Foods, is a privately held company set up over two decades ago, which has grown to become the largest pasta maker in West Africa.
De United said the transaction had been approved by both companies and the regulators.
A banking source close to the deal told Reuters that De United would continue to produce noodles under the Dangote brand for two years after the acquisition.
In July Dufil Prima Foods said it would raise N40bn in the local debt market to broaden its funding base.