Tolaram to acquire shares in Guinness Nigeria as Diageo divests,  NGX All-Share Index sheds 16bps

Tolaram has agreed to acquire Diageo’s 58.02% shareholding in Guinness Nigeria Plc. 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 organisations exiting the country citing tough economic challenges. Meanwhile Bearish sentiment drove the domestic bourse today as the NGX All-Share Index closed 0.16% lower to settle at 99,630.51 points. Sustained investor interest in SEPLAT (+0.26%), GTCO (+2.62%) and ZENITHBANK (+0.57%) was eroded by losses in MTNN (-4.04%), FBNH (-0.43%) and TRANSCORP (-2.27%). Consequently, the year-to-date (YTD) return fell to 33.24%, while the market capitalization shed ₦92.32bn to close at ₦56.36trn. Analysis of today’s market activities showed trade turnover settled higher relative to the previous session, with the value of transactions up by 22.62%. A total of 848.97m units of shares valued at ₦16.55bn were exchanged in 8,064 deals. FIDELITYBK (+2.04%) led the volume and value chart with 293.18m units traded in deals worth ₦2.93bn. Market breadth closed positive at a 1.71-to-1 ratio with advancing issues outnumbering declining ones. TOTAL (+9.98%) led twenty-eight (28) others on the leader’s table, while NASCON (-9.91%) topped sixteen (16) others on the laggards log.

The Tolaram transaction, expected to close in 2025 pending regulatory approvals. This 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 capitalisation 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.  According to the company, this move aligns with Diageo’s “strategic vision to retain brand influence” while leveraging Tolaram’s “extensive” distribution and manufacturing capabilities. With over fifty years in Africa, Tolaram is one of the continent’s leading consumer packaged goods companies. It has a history of successful joint ventures with leading multinational corporations, and this deal potentially reinforces its position as a trusted partner in the African market.  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 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 28% year-on-year revenue growth to N220.3 billion, significant foreign exchange losses, totalling 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 490% year-on-year to N5.6 billion, compounding the fiscal challenges. Despite these setbacks, Guinness Nigeria remains optimistic about its future.

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Dividend Information for 2024