Transnational Corporation of Nigeria (“TransCorp”) announced on Wednesday it will seek to divest its interest in fruit juice concentrate maker, Teragro Commodities Limited.

In a press release, TransCorp said a careful review of the long term proposition of its play in the juice concentrate market revealed a number of issues. As a result of this, the Board decided to exit its investment in Teragro Commodities Limited and is currently working together with the Benue State Government, a key stakeholder, towards identifying suitable partners to drive the value proposition of the business going forward.

Furthermore, the company said it reported in its 2017 Annual Report that it expects to close the transaction in a timely manner and maximize benefits for stakeholders and that the decision to exit Teragro will not have any significant impact on the Group’s business as it contributed less than 0.03% of Group revenue and 0.21% of Group assets.

Teragro is the agricultural arm of TransCorp, a diversified conglomerate with interest in the hospitality industry, energy and oil and gas sectors.

The subsidiary which has a plant in Benue State, processes orange, mango and pineapple concentrates for industrial markets. The Benfruit plant is said to have a capacity of 26,500 metric tonnes and is the first and only Nigerian owned and operated juice concentrate processor in the country.

Terargro partnered Coca-Cola in 2014 and began producing concentrates for the soft drinks giant. However, there have been published reports that one of the challenges facing the agricultural firm is the unavailability of raw materials.

Answering questions around the “Teragro dream” at an investor conference, the President/Chief Executive Officer of Transcorp Plc, Adim Jibunoh, lamented the fact that the business has had to contend with major challenges such as cheaper imported concentrate brands, absence of government protection for local manufacturers, as well as the socio-political environment in which the company operates.

This is why, he noted, “if we continue (with Teragro), will be a loss-making business. It’s a buyer’s market because buyers (and not sellers) dictate the price.”

He also noted the seasonality of fruits, just as the political tensions in that part of the country as other factors that aided the decision to exit the business, which the board believes “no longer made sense.”

Although the board is looking for other willing parties, the group “is still keen on other opportunistic windows in the agribusiness space,” Jibunoh assured.

Also commenting on the decision, Valentine Ozigbo, chief executive of Transcorp Hotels Plc, noted the problem of meeting buyer specifications, quality of the concentrate and security challenges, all of which moved against the forecast based on which the group ventured into the business in 2011.

Christopher Ezeafulukwe, executive director in charge of the group’s oil and gas business recalled government policy at the time to stop the importation of juice concentrates, which attracted the Transcorp group.

Based on that policy at the time, he continued, the first set of 5Alive pulpy juice produced by Coca-Cola was with Teragro concentrates, making Teragro the sole local material source for the juice, amidst hope that government would sustain the policy and provide the enabling environment, which did not happen.

On her part, Mrs. Owen Omogiafo, another ED, corporate responsibility of the board required that the business be reassessed and a decision taken as to whether to continue or preserve the company’s shareholders’ funds.

TranCorp said that the divestment process is still ongoing and has not been concluded.