Diageo rescinds offer to up stake in Guinness Nigeria
Diageo Plc, parent company of Guinness Nigeria Plc announced on Tuesday through its wholly owned subsidiary Guinness Overseas Limited that it was withdrawing its intent to raise its equity stake in Guinness Nigeria Plc by 15.7%.
London-based Diageo had on 9th September 2015 announced its intention to increase its ownership in Guinness Nigeria Plc by 15.7% through a partial tender offer to existing shareholders and would have acquired additional shares on the Nigerian Stock Exchange (NSE) at a price of no more than N175 per share. Diageo already owns 54.3% of Guinness Nigeria and the offer would have raised its equity stake in the company to 70%.
The drinks maker said it was rescinding the offer due to adverse market conditions in Nigeria over the past 12 months.
“In light of the challenging market conditions in Nigeria over the past 12 months, it proposes to focus its resources on continuing to support Guinness Nigeria,” the letter said.
Diageo said it continues to maintain a favourable market outlook for Nigeria in the long-term as it sees growth opportunities.
“Nigeria remains a key strategic market for Diageo which remains supportive of Guinness Nigeria, a company with a long and rich history, its board and management and the actions taken by Guinness Nigeria to mitigate the impact of challenging market conditions,” Diageo said.
Guinness Nigeria reported a net loss of N2 billion in its most recent financial result for the year ended 30th June 2016, with revenue sliding 14% to N102bn, from N118bn in the previous year. Guinness had cited difficult economic environment and challenges with naira devaluation as reasons for the poor performance.
The brewer’s share price has also not been spared as it has fallen 25.47% to 97.99, from a high of N131.48 on 9th September 2015 when Diageo made the announcement to increase its stake in the company.