Dangote Sugar Refinery Plc, a major integrated sugar business predominantly owned by Nigerian billionaire Aliko Dangote, has announced its intention to merge with Nascon Allied Industries Plc and Dangote Rice Limited, both of which fall under the umbrella of the Dangote Group.
Should the merger receive approval, it has the potential to bring about a significant transformation in the Nigerian food and consumer goods industry. The consolidation of these businesses is anticipated to reshape the market landscape and open up new avenues for growth.
The proposed merger, involving Dangote Sugar, Nascon (a salt-processing company), and Dangote Rice, will be a focal point of discussion during the upcoming Board of Directors meeting scheduled for Friday, July 28.
The objective of this merger is to establish a colossal food conglomerate with a diverse range of products, including sugar, rice, salt, vegetable oil, tomato paste, seasoning, and other savory items.
The board of directors will review the terms and potential benefits of the merger, anticipating a significant impact on the Nigerian sugar industry and the overall market.
The strategic move aims to consolidate the resources and operations of the three companies, enhancing market position, operational efficiency, and profitability.
Dangote Sugar and Nascon recently reported impressive financial results for the first quarter of 2023. Dangote Sugar’s profit rose from N8.87 billion ($11.4 million) in Q1 2022 to N12.8 billion ($16.5 million) in the corresponding period of 2023. Similarly, Nascon witnessed a 325.28 percent increase in profit, from N386.37 million ($498,600) in Q1 2022 to N1.64 billion ($2.11 million).
Investors on the Nigerian Exchange have reacted positively to the planned merger, with shares of both Dangote Sugar and Nascon experiencing a surge in demand.
As of the time of reporting, shares of Dangote Sugar and Nascon were trading at N29.85 ($0.0385) and N25.5 ($0.0329), respectively, representing a 9.94 percent and 9.91 percent increase from their opening prices this morning.
This surge in share prices has resulted in a market capitalization of N330 billion ($425.7 million) for Dangote Sugar and N61.5 billion ($79.3 million) for Nascon.