BY NKIRUKA NNOROM
Dangote Sugar Refinery, DSR, has announced the acquisition of 95 percent equity stake in Savanna Sugar Company limited, SSC, in a bid to maintain its dominant position in the Nigerian sugar industry.
The deal, according to notice filed with the Nigerian Stock Exchange, NSE on Friday, was executed through a Share Sale and Purchase Agreement, SSPA, with Dangote Industries Limited, DIL, by acquisition of 2.14 billion ordinary shares of N1.00 each in Savanna Sugar.
The acquisition therefore represents 95 percent of the issued share capital of Savanna Sugar.
Dangote Sugar explained that the execution of the SSPA was consequent upon earlier approval obtained from the board of DSR, Securities and Exchange Commission, SEC, and shareholders of the company.
The company further stated that the desire to acquire SSC was borne out of the need to sustain its market leadership, adding that it was also in line with the company’s goal of attaining the status of a fully integrated sugar company via backward integration strategy.
“DSR is confident that the acquisition of SSC will provide the company with a solid platform to supplement its existing sugar refinery capacity; reduce input cost, substantially scale its business with new business opportunities, including the generation of bio-ethanol fuel from the production of molasses and development of a bagasse-based coal generation plant,” DSR said in the statement.
The statement added that the acquisition would increase Dangote Sugar Refinery’s margins, boost its export potential, as well as provide a valued basis for further profitable growth of the company.
It is also expected that the deal would go a long way in enhancing shareholders’ value.
Savanna Sugar Company Limited is a fully integrated sugar producing company located in Numan, Adamawa state and established by the federal Government of Nigeria in 1971. SSC was subsequently privatized in 2001 by the FGN with DIL emerging as the preferred bidder.
The privatization was completed in 2003 wherein 95 percent ownership of SSC was transferred to DIL through Bureau of Public Enterprises.
The principal activities of SSC include growing and processing of sugar cane with product offerings spanning white crystalline refined sugar (finished product), molasses (by-product), bagasse (consumed for company-owned boilers), and filter press mud (used as manure in the fields).
SSC has 32,000 hectares of land for cultivation of sugar cane, out of which 5,200 hectares are currently under cultivation. The company has a cane crushing capacity of 4,000 metric tones of canes per day.