Guinness Nigeria Rises by 19% on Diageo Exit Notice
Guinness Nigeria Plc’s market value climbed by 19.2% over the last five trading sessions in the stock market following notice of Diageo’s decision to sell its 58.2% interest to Tolaram.
According to some analysts, the divestment was fast tracked following Guinness Nigeria’s decision to stop importation of Johnnie Walker, Bailey, etc.
In October 2023, Guinness Nigeria Plc announced it would discontinue the importation and distribution of certain Diageo international premium spirits products from April 2024.
The company made the tough decision against importation of Johnnie Walker, Singleton, Baileys starting from April 2024 as exchange rate revaluation continues to damage its earnings.
According its unaudited financial statement for 9 months in 2024, Guinness Nigeria reported N82.97 billion as FX loss. The huge amount lost to naira fluctuation was a result of foreign currency intercompany loans, US dollar denominated letters of credit and other FX liabilities.
The loss of market access triggered Diageo decision to roll out drum from the local market where it had hold sway as majority shareholders in Guinness Nigeria Plc for years.
Details from the divestment notices showed that Tolaram Group will acquire Diageo’s 58.02% majority stake in the company at N81.60.
According to data from the Nigerian Exchange, the deal price is 48.91% premium to its current price of N54.80, with the transaction expected to be completed in 2025.
Details of the divestment deal showed that Tolaram will establish 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.
Guinness brand will be also be licensed to Guinness Nigeria for the long term. According to the disclosure, Tolaram plans to subsequently initiate a mandatory takeover in compliance with local regulatory requirements.
This is expected to push its market value higher as local investors take opportunity from premium payment, perhaps, at the takeover points. Stockbrokers told MarketForces Africa that the market will continue to watch out for development to make investment decision.
“If Tolaram is going to take Guinness Nigeria Plc private, it will do so at premium.” #Guinness Nigeria Rises by 19% on Diageo Exit Notice
