Tolaram to Acquire Diageo’s 58.02% Shareholding in Guinness Nigeria

Kayode Tokede

A Singapore-based Tolaram Group has agreed to acquire Diageo’s 58.02per cent shareholding in Guinness Nigeria Plc, according to a filing on the Nigerian Exchange Limited (NGX).

Amid the announcement, the stock price of Guinness Nigeria, yesterday gained 8.41per cent or N4.25 to close at N54.80 per share.

However, the Legal Director/Company Secretary. Guinness Nigeria, Mrs. Abidemi Ademola in a filing dated June 11, 2024 said that under the terms of an agreement, Tolaram is expected to acquire Diageo’s 58.02per cent shareholding in the brewery market.

She expressed that part of the signed agreement  was entering into long-term license and royalty agreements for the continued production of the Guinness brand and its locally manufactured Diageo ready-to-drink and mainstream spirits brands.

According to her statement., the transaction is expected to be completed during Fiscal 2025, subject to obtaining the requisite regulatory approvals in Nigeria.

“Diageo remains deeply committed to Nigeria and will retain ownership of the Guinness brand, which will be licensed to Guinness Nigeria for the long-term, enabling the next phase of growth and development of Guinness Nigeria under the stewardship of Tolaram.

“With a five-decade presence in Africa, Tolaram is one of the largest consumer packaged goods companies on the continent and has forged joint venture partnerships with several leading consumer multinational companies.

“In partnership with Guinness Nigeria and Tolaram, Diageo will continue to drive the brand and marketing strategy for Guinness in Nigeria, to ensure Diageo’s exceptional capabilities in brand building and innovation continue to drive long-term growth for Guinness in Nigeria.

“Following completion of this transaction, Guinness Nigeria will remain listed on the Nigerian Exchange Ltd. and, subject to regulatory approvals, Tolaram intends to launch a mandatory takeover offer in compliance with local law requirements,” the statement added.

Thee Board Chair, Guinness Nigeria, Omobola Johnson, in a statement said, “Today’s announcement represents a significant opportunity for the next phase of growth for Guinness Nigeria. This partnership brings together Tolaram’s deep expertise in manufacturing and distribution, and Diageo’s exceptional capabilities in brand building and innovation.

“I believe this is a winning combination which leaves Guinness Nigeria extremely well placed to drive further growth in this market.”

Managing Director/Chief Executive Officer, Guinness Nigeria, Adebayo Alli  in a statement also said: “Today’s announcement marks an exciting moment for Guinness Nigeria, our employees and our customers.

“I look forward to working alongside Tolaram, which is one of the largest and most respected consumer goods companies in Africa, and I am pleased to note Tolaram’s alignment with Guinness Nigeria’s values and its strong commitment to build an enduring and sustainable business”.

Managing Director, Tolaram Africa, Haresh Aswani added that “We are thrilled to welcome Guinness Nigeria, a company with such a rich legacy and strong consumer loyalty, into our ecosystem. This strategic move will expand our significant footprint in the Nigerian market and presents an opportunity to leverage our combined strengths to foster innovation and deliver immense value to our customers and shareholders across the nation.”

The announcement comes at a challenging time for Guinness Nigeria. The company recently reported a loss after tax of N61.7 billion for the nine months ending March 31, 2024, a stark contrast to the N5.9 billion profit in the same period the previous year.

Despite a 28per cent revenue growth to N220.3 billion, significant foreign exchange losses, totaling N83 billion, and a pre-tax loss of N60.5 billion have severely impacted the company’s financial health.

The financial strain has wiped out Guinness Nigeria’s retained earnings, pushing the company into a negative equity of N4.7 billion.

The interest expenses on loans and borrowings surged by 490per cent year-on-year to N5.6 billion, compounding the fiscal challenges. Despite these setbacks, Guinness Nigeria remains optimistic about its future.

The company states it is focusing on “innovation and operational excellence” to navigate the financial turbulence and is confident in its resilience and strategic vision for long-term sustainability and shareholder value.

Following the acquisition, Guinness Nigeria will continue to be listed on the Nigerian Exchange Ltd where Nigerians still own minority shareholdings.

However, Tolaram also intends to launch a mandatory takeover offer, complying with local law requirements, which will provide existing shareholders an opportunity to exit or participate in the company’s restructured future.

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