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Guinness sells stake amid concerns of delisting from Nigeria’s stock market

GUINNESS Nigeria Plc has sold over 50 per cent of its stake to Tolaram Group amid fears that the company would delist from the Nigerian stock market as it had battled poor financial performances in the last year.

The company disclosed this in a corporate disclosure to the investing public on Tuesday, June 11.

It said Guinness Nigeria would be taken over by Tolaram subject to approvals by relevant authorities.

“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 company stated.

The ICIR reported in October 2023 that Guinness Nigeria halted the sales and distribution of its projects Johnnie Walker, Singleton, Baileys and other imported brands, citing currency problems.

As of June 2023, the company reported a massive loss in foreign exchange by 20,601 per cent to N45.95 billion compared to N221.98 million in June 2022.

In its recently released financial reports for the months ended March 31, 2024, Guinness Nigeria posted a loss after tax of N61.7 billion compared to the N5.9 billion profit in the same period the previous year.

It also posted N83 billion in foreign exchange losses and a pre-tax loss of N60.5 billion that impacted the company’s financial health as the financial strain wiped out its retained earnings and pushed the company into negative equity of N4.7 billion.

Although Diageo Plc, the UK-based majority owner of Guinness Nigeria, had last year said there were no changes to its shareholding in Guinness Nigeria and that it remained a key shareholder, however, under the terms of an agreement signed on Tuesday, June 11, Tolaram will acquire Diageo’s 58.02 percent shareholding in Guinness Nigeria.

Tolaram will enter 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.

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The transaction is expected to be completed during the 2025 fiscal year, subject to obtaining the requisite regulatory approvals in Nigeria.

The ICIR reports that 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 per cent stake will cost Tolaram at least N64 billion.




     

     

    Commenting, the Board Chairperson of Guinness Nigeria, Omobola Johnson, said, “This partnership brings together Tolaram’s deep expertise in manufacturing and distribution, and Diageo’s exceptional capabilities in brand building and innovation.”

    Managing Director of Tolaram Africa, Haresh Aswani, said, “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.”

    Shareholders who spoke with The ICIR, however, expressed displeasure over the takeover of Guinness Nigeria, lamenting that it is the minority shareholders that would bear the brunt.

    “It is very unfortunate. We are sinking in the same course every time and each time it happens, the minority shareholders are at a disadvantage.” the national president of New Dimension Shareholders, Patrick Ajudua, said.

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