The shareholders of Dangote Sugar Refinery Plc (DSR) have endorsed the formal takeover of Savannah Sugar Company Ltd (SSCL).
This, they say, is in a bid to enhance production capacity and further increase their market share.
According to a statement by a spokesperson of the conglomerate, the shareholders of DSR during their Extraordinary General Meeting (EGM), voted in favour of the merger of the two company as the sub-Saharan Africa’s largest sugar refining firm embarked on the next stage of its backward integration plan to revolutionized the sugar sub-sector of the nation’s economy.
DSR had earlier announced plans to merge with SSCL through a disclosure notice sent to the Nigerian Stock Exchange.
It said, at the time, that the decision would be subject to the approval of both companies’ shareholders, adding that further announcements on the transaction would be provided to the market
In its new declaration, the Chairman of the company, Aliko Dangote, said the DSR, a top tier player in the industry with installed capacity to produce 1.44 million metric tons 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 SSCL land under cultivation.
Mr Dangote explained that the DSR board considered the merger as fair and reasonable and believed that it would provide strategic opportunities and benefits for the company, employees, and other concerned parties, as the new company would be operating from the position of increased access to capital and then higher profitability.
He listed some of the benefits of the merger as being to consolidate the assets, intellectual property rights, operations, and business dealings of the SSCL into the DSR; 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.
Mr Dangote explained that necessary approvals have been given by all concerned regulatory authorities and that the merger would positively alter the sugar sectorial landscape as the federal government’s backward integration policy would be better implemented by the company.
Earlier, during AGM of the company, a shareholder rights activist, Nona Awoh reportedly urged the Government to protect the manufacturing sector through incentives and promotional policies.
He specifically asked the government to secure the borders in order to deter smugglers who flood the market with inferior goods at lower prices, therefore, strangulating the manufacturing sector.
Mr Awoh also 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.
He appreciated that he was chosen to represent other shareholders at the AGM where attendance and participation were restricted because of the COVID-19 guidelines.
In his reaction, the shareholder activist, Sunny Nwosu, urged Dangote Sugar to increase local production by setting more sugar plantations so 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.
Mr Nwosu was particular that management should increase production volume now that the borders are shut and develop export capabilities to increase sales and profit.
Another shareholder representative, Bisi Bakare, tasked the management of the sugar refinery to put more efforts to make more profits which would result in more dividends.
Responding to this, DSR said 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.
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.