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Guinness made this announcement via a press release on the website of the NGX.
This announcement is the latest in a string of major multinational organizations exiting the country citing tough economic challenges.
The transaction, expected to close in fiscal 2025 pending regulatory approvals, will also see Tolaram enter into long-term licensing and royalty agreements to continue producing the iconic Guinness brand alongside Diageo’s ready-to-drink and mainstream spirits locally.
Guinness has a market capitalization of N110.7 billion based on its current share price of N50.5 per share suggesting the deal could top over N64 billion.
Diageo, while selling its controlling stake, will maintain ownership of the Guinness brand, ensuring its legacy continues under the stewardship of Tolaram.
The acquisition also marks a significant expansion of Tolaram’s footprint in Nigeria, promising enhanced innovation and value delivery to customers and shareholders.
Omobola Johnson, Board Chair of Guinness Nigeria, hailed the deal as a pivotal moment for the company.
“This partnership brings together Tolaram’s deep expertise in manufacturing and distribution with Diageo’s exceptional brand-building and innovation capabilities. It positions Guinness Nigeria for robust growth in this dynamic market,” she said.
Adebayo Alli, Managing Director and CEO of Guinness Nigeria echoed these sentiments, expressing enthusiasm for the collaboration. “This announcement marks an exciting chapter for Guinness Nigeria. Tolaram’s alignment with our values and commitment to sustainability and enduring business success bodes well for our future,” Alli stated.
Haresh Aswani, Managing Director of Tolaram Africa, expressed his excitement about the strategic acquisition. “Welcoming Guinness Nigeria, a company with such a rich legacy and strong consumer loyalty, into our ecosystem is thrilling. This move will expand our significant footprint in the Nigerian market and leverage our combined strengths to foster innovation,” Aswani noted.
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.
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.
Diageo’s decision to exit its controlling stake in Guinness Nigeria follows a broader trend observed among multinational corporations operating in Nigeria.
The company last year halted the sale of imported spirit products like Baileys, Johnny Walker, Singleton and others under its 2016 sale and distribution agreement with Guinness Nigeria.
The decision according to the company aligns with its strategic plan to wholly own spirit-focused business in Nigeria and West Africa. However, that seems like the first step in its divestment strategy.
Guinness Nigeria is currently valued at N110 billion, and with the company’s share price at N50.5, the acquisition of Diageo’s 58.02% stake will cost Tolaram at least N64 billion.
This substantial investment underscores Tolaram’s commitment to the Nigerian market and its confidence in the long-term prospects of Guinness Nigeria.
As Tolaram integrates Guinness Nigeria into its portfolio, industry watchers will closely monitor how this strategic move influences the beverage sector and the broader economic environment in Nigeria.
Source: Naira Metrics
Image: Financial Times