To reshape Nigeria’s beverage market, Tolaram has agreed to acquire Diageo’s 58.02 per cent shareholding in Guinness Nigeria Plc.
This announcement was made by Guinness via a press release on the Nigeria Exchange (NGX).
This announcement is the latest in a string of major multinational organizations exiting the country alighting tough economic challenges amidst the business environment.
Key Developments
Transaction Overview:
- Acquisition: Tolaram Group is set to acquire Diageo’s 58.02% stake in Guinness Nigeria Plc.
- Value: The acquisition is estimated at over ₦64 billion, with completion expected in fiscal 2025, pending regulatory approval.
- Licensing: Tolaram will continue to produce Guinness and other Diageo brands locally under a long-term agreement.
Economic Context:
- Diageo’s Exit: This move reflects broader challenges in Nigeria’s economic environment, which has seen several multinationals exit due to adverse conditions since President Tinubu took office on May 29, 2023.
Guinness Nigeria’s Performance:
- Financial Health: Guinness Nigeria reported a loss after tax of ₦61.7 billion for the nine months ending March 31, 2024, despite a 28% revenue increase to ₦220.3 billion.
The acquisition is a strategic move for Tolaram, leveraging its robust distribution network and operational expertise in Nigeria. Diageo’s exit, amidst economic challenges like currency volatility and inflation, underscores the need for adaptable strategies in the Nigerian market. The transaction highlights Tolaram’s confidence in Nigeria’s long-term potential despite short-term economic hurdles.
Several other multinational companies have exited Nigeria since President Tinubu’s inauguration:
- Unilever: Left in June 2023, citing high operating costs and currency devaluation.
- GSK: Announced its departure in August 2023 due to an unfavourable economic climate.
- Procter & Gamble (P&G): Exited in September 2023, shifting to an import-only model due to economic challenges.
- Sanofi-Aventis: Will end direct operations in early 2024, moving to a third-party model for product distribution.
- Bolt Food and Jumia Food: Ceased their food delivery services in late 2023, citing high operational costs.
- Equinor: Sold its Nigerian operations in November 2023, marking the end of its three-decade presence in the country.
These exits highlight the pressing need for Nigeria to create a more stable economic environment that which multinational corporations and firms can invest in.