Shareholders endorse Dangote Sugar, Savannah Sugar merger
Shareholders of Dangote Sugar Refinery Plc have given the nod for the formal takeover of Savannah Sugar Company Ltd, a move that would enhance production capacity and further increase market share of the sugar refining firm.
The endorsement was given during the Extraordinary General Meeting (EGM) of Dangote Sugar Refinery which was preceded by the 2019 Annual General Meeting. The merger of the two company will further sub-Saharan Africa’s largest sugar refining firm’s backward integration journey to revolutionizing the sugar sub-sector of Nigeria’s economy.
Chairman of the company, Aliko Dangote said the Dangote Sugar Refinery, a top tier player in the industry with an installed capacity to produce 1.44 million metric tonnes per annum will be leveraging on the savannah sugar’s sugarcane production capacity to enhance its production capacity.
According to him, Savannah Sugar has 32,000 hectares of land available for cultivation of sugar cane as well as milling capacity of 50,000 tonnes of sugar per annum and that upon the merger, further investments would be made to increase Savannah Sugar land under cultivation.
Dangote explained that the Dangote Sugar Refinery board considered the merger as fair and reasonable and believed that it would provide strategic opportunities and benefits for the company, employees, and other stakeholders as the new company would be operating from the position of increased access to capital and then higher profitability.
The merger will result in the consolidation of the assets, intellectual property rights, operations, and business dealings of the Savannah Sugar into Dangote Sugar consolidate; eliminate cost inefficiencies arising from duplication of resources and processes and improve the efficiency through more focused management of resources and position it as the biggest integrated sugar producer in Nigeria.
The necessary approvals have been given by all concerned regulatory authorities, Dangote Refinery said.
Earlier, during AGM of the company, a shareholder rights activist, Nona Awoh urged the Government to protect the manufacturing sector through incentives and promotional policies. He specifically asked the government to secure the borders to deter smugglers who flood the market with inferior goods at lower prices, therefore, strangulating the manufacturing sector.
He asked Dangote Sugar to liaise with the Manufacturers Association of Nigeria(MAN) and NECA to form a pressure group that should engage the government to increase efforts in curbing smuggling.
Awoh appreciated that he was chosen to represent other shareholders at the AGM where attendance and participation were restricted because of the COVID-19 guidelines.
Foremost shareholder activist, Sunny Nwosu charged Dangote Sugar to increase local production by setting more sugar plantations as to make Nigeria sufficient in sugar production. He said that Dangote has achieved this feat in cement which has made Nigeria a net exporter of cement adding that it is possible to replicate the same in sugar production.
Nwosu was particular that management should increase production volume now that the borders are shut and develop export capabilities to increase sales and profit.
Dangote responding stated that the future of the business is in growing more sugar locally as to hedge from the fluctuations in foreign exchange. Growing more sugar locally means removing the need for the import of raw sugar for refining.
He said that the backward integration which is still ongoing has seen the establishments of many sugar plantations across Nigeria. “We will try to meet the domestic demand for sugar from local production,” he added.
Despite the challenging business environment and the intense competition in the industry, the company posted a group turnover of N161.1 billion, a 7.1 percent increase over N150.4 billion in 2018, a profit before tax (PBT) of N29.8 billion, profit after tax (PAT) of N22.4 billion.