Equities
Diageo sells 58.02% stake in Guinness Nigeria to Tolaram for $70 million amid challenging economic conditions.
Diageo Plc, the UK-based beverage giant, has announced the sale of its 58.02% controlling stake in Guinness Nigeria Plc to Singapore-based Tolaram Group. The transaction, valued at approximately $70 million, will see Tolaram acquire Diageo’s shares at 81.6 naira ($0.05) per share. This move aligns with a broader trend of multinational companies reducing their exposure to Nigeria amid challenging economic conditions.
The sale is part of a strategic shift for Diageo, which will retain ownership of the Guinness brand. Diageo will enter into long-term license and royalty agreements with Tolaram to continue the production of Guinness and other locally manufactured ready-to-drink and mainstream spirits in Nigeria. The transaction is expected to be completed in fiscal 2025, pending regulatory approvals in Nigeria.
Nigeria, Africa’s most populous nation, is currently grappling with severe economic challenges, including a scarcity of dollars needed by international businesses to repatriate earnings. The naira has depreciated by almost 70% since June, and the country is experiencing decades-high inflation, which is eroding profits and hurting consumer demand. These factors have made operating in Nigeria increasingly difficult for multinational companies.
In recent months, other major companies such as Unilever Plc, Procter & Gamble Co., GSK Plc, and Sanofi have also announced plans to cut back on their exposure or exit the Nigerian market. The economic environment has prompted these companies to reassess their operations in the country.
Tolaram, a Singapore-based multinational with a 50-year presence in Africa, is set to take over Diageo’s stake in Guinness Nigeria. Tolaram is known for its extensive expertise in manufacturing and distribution and has formed joint ventures with several major multinational consumer companies. The acquisition will allow Tolaram to leverage its capabilities to drive growth and innovation for Guinness Nigeria.
Omobola Johnson, Chairman of Guinness Nigeria, commented on the acquisition, stating, “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.”
Guinness Nigeria will remain listed on the Nigerian Exchange (NGX) following the completion of the transaction. However, recent acquisitions in the market have often resulted in companies being fully taken over and delisted.