NIGERIA – Dangote Group Plc has announced its plans of merging with its two subsidiaries, Dangote Sugar Refinery (DSR) Plc and Savannah Sugar Company Limited (SSCL) into a single entity through a scheme of external restructuring.
Dangote Sugar Refinery Plc engages in refining and marketing sugar while Savannah Sugar Company Limited (SSCL) is engaged in sugar cane farming and sugar milling.
The Board of Directors of Dangote Sugar Refinery Plc (DSR) has recommended the business combination expecting that the Scheme will involve the transfer of all assets, liabilities and undertakings of SSCL to DSR.
Adding that cancellation of the entire issued share capital of SSCL with DSR emerging as the surviving entity.
The company stated that the transaction would be subject to the receipt of approval of shareholders of DSR and SSCL at separate court-ordered meetings.
As well as, “The receipt of the regulatory approvals from the Securities and Exchange Commission and the Federal Competition and Consumer Protection Commission is also important.” The company stated.
Savannah Sugar Company has milling capacity of 50,000 tonnes of sugar per annum supported by 6,750 hectares of sugarcane cultivated on its sugarcane fields.
Dangote Sugar Refinery commissioned in 2001 with an initial installed capacity to process 600,000 MT of raw sugar per annum.
Combining the two entities will enable the group gain economies of scale and boost its market share as Dangote Sugar stock has lost more than 30% in share price value since beginning of 2019.
The company reported a decline in profit in its 9 months financial statement for 2019.
It reported a revenue of N117.4 billion (US$323.8m) in the last three quarters of 2019, indicating a 0.57% increase compared to its N116.8 billion (US$322.2m) revenue for 2018.
Cost of sales increased by 1.5% to N88.4 billion (US$243.8m), up from N87 billion (US$239.9m) during the comparable period last year.
However, there was a 12.4% decline in the company’s profit before tax for the period which stood at N22.9 billion (US$62m) compared to N26.2 billion (US$72.2m) during the comparable last year.
In the same vein, the company’s profit after tax declined by 12% to N14.8 billion (US$40.8m) compared to N16.9 billion (US$46.6m) recorded in the first three quarters of last year.