Diageo Sells Entire 58% Stake In Guinness Nigeria To Tolaram Group

Irish brewery giant, Diageo on Tuesday said it has signed an agreement that will see Tolaram Africa Enterprises Limited acquiring its entire 58.02% shareholding in Guinness Nigeria Plc in a deal expected to be completed in 2025, subjected to approval by Nigerian regulators.

Consequently, Diageo said it entered into a “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.

It is not immediately clear whether the decision has anything to do with the current downturn in its business arising from the nation’s poor economic realities.

Quick checks shows that Tolaram Africa, a Singaporean giant owned by the Vaswanis began as a family business in 1948 with a textile retail shop in Indonesia. From there, it has over the years diversified into consumer goods, and fintech. They operate through such joint ventures as Dufil Prima Foods, Multi Pro, TG Arla, Kellogg Tolaram. The group also has investments in infrastructure and industrial such as the Lagos Free Zone, Lekki Port, BHN, a logistic company, among others.

According to the unaudited result of Guinness Nigeria Plc for the third quarter ended March 31, 2024, presented through the Nigerian Exchange Limited for example, Guinness Nigeria reported a slim growth in turnover, while bottom line slipped into negative territory.

While revenue for the first nine months of the current financial year rose marginally from N172.478bn to N220.302bn, loss after tax stood at N61.652bn, compared to the previous N5.865bn profit. This translated to a Loss Per Share of N28.15, from the previous Earnings Per Share of N2.68, meaning that unless a miracle happens, shareholders will go without a dividend by the time the audited result for the full-year ended June 30, 2024 is released.

Notwithstanding the planned divestment, Diageo in a statement to the NGX by Abidemi Ademola (Mrs), its Legal Director/Company Secretary, reiterated its deeply commitment “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.”

Ademola assured that “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,” she added.

As if to assuage of a possible delisting of the company after the ownership transfer, Diageo said post-transaction, “Guinness Nigeria will remain listed on the Nigerian Exchange Limited.”

In any another breadth, Diageo hinted of a possible delisting of Guinness Nigeria shares from the NGX when it added that “subject to regulatory approvals, Tolaram intends to launch a mandatory takeover offer in compliance with local law requirements.”

The statement quoted Omobola Johnson, the company’s Chairman as describing the announcement as “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,” she stressed.

For Adebayo Alli, Managing Director/Chief Executive Officer, Guinness Nigeria, the “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”.

On his part, Haresh Aswani, Managing Director, Tolaram Africa, said: “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.”