Dangote Flour Mills (DFM), has offloaded stakes in noodles business for not considering it strategic.
The decision stemmed from its regular business portfolio review which encouraged sale of the assets of Dangote Noodles to Dufil Prima Foods, makers of Indomie noodles.
Already, the transition has taken off as DFM has offered Dufil the use of some of its facilities on an interim basis.
The noodles business was part of Dangote Flour Mills which the Dangote Group recently re-acquired from Tiger Brands.
Group Managing Director, Dangote Flour Mills, Thabo Mabo, said the divestment is part of strategies of focusing on core areas of flour and pasta production where the company has substantial market share.
He said that with the divestment, Dangote Flour will now focus on its strengths in flour and pasta and become more profitable by improving in areas of quality, distribution and marketing.
The transaction which became effective last Monday, according to him, “is a win-win situation for Dangote Flour Mills, Dufil Prima Foods and staff of Dangote Noodles”, as Dangote Flour stands to boost more market presence through robust marketing
He described the sale and transfer of assets as one of the most perfect divestments, with Dufil Prima Foods taking possession and kicking off production immediately.
Under the terms of sales agreement, Dufil Prima Foods, according to him, will continue to produce and sell noodles under the brand name, ‘Dangote Noodles’ for two years before changing the brand name.
Industry analysts however did not see the move as chickening out of the sector due to inability to stand the competition, but a strategy to consolidate investments in other stables on Dangote group.
Chief Executive Officer, Dufil Prima Foods, Deepak Singhal, confirmed the deal and described the acquirement of Dangote Noodles as strategic as they continue to seek more dominance of the noodles market.
Acquiring Dangote Noodles, he said will help Dufil Prima Foods deepen and sustain their market share as well as gain a strategic advantage in terms of several range of noodles products in their stable.
He re-stated that they are not shutting down the noodles production line but are commencing production with the brand name of Dangote Noodles immediately.
To ensure seamless transition and commencement of production, he said most of the former staff of Dangote Noodles are to be employed as staff of Dufil Prima Foods.
With the new development, some former staff of Dangote noodles will transit to Dufil Prima Foods, while the rest redundant workers are being adequately compensated with mouth-watering severance package for their services to the company over the years.
He said the terms of the severance package was agreed with the relevant trade unions and staff are paid off immediately to enable those retained by the new owners to start on a fresh contract while those who will not be retained will not have to wait for their benefits.