Nigeria: Guinness Nigeria says Diageo’s decision not to increase stake will not have negative impact on the firm

Guinness Nigeria has said Diageo’s decision to stop its earlier offer to increase its equity stake in the firm will not have any negative impact on the firm or its shareholders, naija247news.com reported.

On September 9, Diageo, acting through its wholly-owned subsidiary, Guinness Overseas Limited, had announced its intention to increase its equity stake in Guinness Nigeria Plc to 70 per cent from the current 54.3 per cent and maintain the company’s listing on the Nigerian Stock Exchange.

Reuters had reported that Diageo said last year that it planned to buy 15.7 per cent of Guinness Nigeria for up to N41.37bn.

However, three weeks after the potential offer was made, in a memo dated October 4, Guinness announced that Diageo would not proceed with the offer.

Diageo cited challenging market conditions in Nigeria over the past 12 months as reason for its decision to renege on the offer, adding that it proposed to focus its resources on continued support for Guinness Nigeria.

Speaking in a telephone interview with journalists on October 5, the Director of Corporate Affairs and Company Secretary, Guinness Nigeria, Mr. Sesan Sobowole, said the decision would not affect Guinness Nigeria negatively.

He said if Diageo had gone ahead to acquire more shares, it would have bought the shares from existing shareholders of the company and the money would have been given to them and not to the brewer.

He added that Diageo had pledged to continue to support Guinness Nigeria.

Sobowole also said the decision would not have any adverse effect on shareholders because they would still have the opportunity to sell their shares on the floor of the Nigerian Stock Exchange.

Nigeria accounted for three per cent of Diageo’s sales of 10.5 billion pounds ($13.4 bln) in its most recent financial year.

In September, it gave the business a $95m loan to help it cope with dollar scarcity, which had seen some foreign companies pulling out of Nigeria in recent times.

Diageo predominantly deals in spirits, but says owning Guinness beer helps its footprint in Africa.

06 October, 2016