Dangote Noodles Limited, a unit of Nigerian company Dangote Flour Mills, has sold two production lines to rival pasta maker De United Foods Industries for 3.75 billion naira ($12.26 million), the company said on Tuesday.

Photo: Shutterstock.

De United said it has signed an agreement with Dangote Noodles to buy plants at its Ikorodu and Calabar factories. It would also buy stock worth 383.94 million naira.

The deal comes after Dangote sold a small stake in its cement business to foreign investors in a one-off stock market deal valued at 27 billion naira.

Dangote Flour Mills, majority owned by Africa’s richest man Aliko Dangote, had said it wanted to quit the noodles business to focus on flour and pasta production, analysts say.

Nigeria’s noodle market is fiercely competitive and De United with a market share of around 70 percent is seeking to consolidate the sector.

Privately-held Dangote Industries Limited, with interests in agriculture, real estate and truck assembly, bought back the flour unit it had sold to South Africa’s Tiger Brand for $1 in 2015 after it posted losses.

Shares in Dangote Flour Mills have more than doubled so far this year after rising 276 percent last year. The stock price was down 3.17 percent on Tuesday at 9.20 naira.

Dufil Prima Foods, the parent of De United Foods, is a privately held company set up over two decades ago, which has grown to become the largest pasta maker in West Africa.

De United said the transaction had been approved by both companies and the regulators.

A banking source close to the deal said that De United would continue to produce noodles under the Dangote brand for two years after the acquisition.

In July Dufil Prima Foods said it would raise 40 billion naira in the local debt market to broaden its funding base.

($1 = 305.80 naira)