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South Africa’s
Tiger Brands, maker of food and consumer goods, agreed to buy 49
percent of the food business of Nigeria’s UAC, as it ramps up expansion
in fast-growing African markets to offset slack demand at home.

Tiger also said on
Wednesday it had acquired Deli Foods Nigeria, an unlisted biscuit
maker, and had formed a joint venture with Ethiopia’s East African
Group to manufacture and sell personal goods and food. It did not say
how much it paid for any of the transactions.

Tiger, which also
reported a slight decline in full-year profit, becomes the latest South
African firm to make a push into poor but rapidly growing sub-Saharan
frontier markets.

“Africa is a long
way from being developed, but fast-moving consumer goods such as food
will continue to be a staple consumption, and Tiger Brands wants to be
part of the action,” said Zaheer Joosub, an analyst at Citigroup in
Johannesburg.

Home to about 1
billion people, Africa’s population is expected to double by 2050. Many
frontier economies boast growth rates of 7 percent or more, far
outstripping the projected 2 to 3 percent in South Africa, the
continent’s largest economy.

In what may be the
biggest bet on the long-term outlook for the African consumer, U.S.
retailer, Wal-Mart Stores Inc., is in talks to buy a controlling stake
in South Africa’s Massmart, which also has a presence in some frontier
African markets.

Focus on Nigeria

Tiger Brands said Deli Foods and the Ethiopia business would initially add 500 million rand in annual sales.

The UAC deal will
give Tiger a big presence in Nigeria, Africa’s most populous nation and
sub-Saharan Africa’s second-largest economy, while for UAC, which is
struggling to fend off increased competition, the deal with Tiger is
“very positive”, said Akinbamidele Akintola, an analyst at Renaissance
Capital, in a note to clients.

“This strategic partnership might help turn around the operations of the business to regain market (leadership),” he said.

Tiger Brands, which
makes bread, breakfast cereal, and energy drinks, reported headline
earnings per share of 1.39 rand for the year to end-September, compared
with 1.41 rand last year.

Headline EPS is the main profit gauge in South Africa and excludes certain one-time and non-trading items.

Sales from
continuing operations fell 2 percent to 19.3 billion rand, hurt by
lower food prices and the weaker business environment. Tiger said that
while there was a steady increase in sales in recent months, it
remained cautious about the outlook for the first half of the new
financial year.

Shares of the
company were up 0.8 percent at 185.33 rand by 1018 GMT, compared with a
flat Johannesburg All-Share index. Tiger Brands shares have gained 8
percent so far this year, compared with a nearly 12 percent rise in the
benchmark.

Shares of UAC were little changed, outperforming a 0.7 percent dip in Nigeria’s All-Share index.