Diageo Joins The Exit Route, As Tolaram Group Takes Charge At Guinness Nigeria 


Tolaram Group has concluded plans to acquire Diageo’s 58.02% shareholding in Guinness Nigeria Plc. The acquisition marks a significant expansion of Tolaram’s footprint in Nigeria, promising enhanced innovation and value delivery to customers and shareholders. 

This announcement which was made known by Guinness through a press release on the NGX is the latest in a string of major multinational organizations exiting the country citing tough economic challenges. 

 The transaction, expected to close in fiscal 2025 pending regulatory approvals, will also see Tolaram enter into long-term licensing and royalty agreements to continue producing the iconic Guinness brand alongside Diageo’s ready-to-drink and mainstream spirits locally. 

 Guinness has a market capitalization of N110.7 billion based on its current share price of N50.5 per share suggesting the deal could top over N64 billion. 

 Diageo, while selling its controlling stake, will maintain ownership of the Guinness brand, ensuring its legacy continues under the stewardship of Tolaram.  

 Speaking on the move, the company said it aligns with Diageo’s strategic vision to retain brand influence while leveraging Tolaram’s extensive distribution and manufacturing capabilities. 

 With over fifty years in Africa, Tolaram is one of the continent’s foremost consumer packaged goods companies. It has a history of successful joint ventures with leading multinational corporations, reinforcing its position as a trusted partner in the African market. 

 Commenting on the deal, Omobola Johnson, Board Chair of Guinness Nigeria, hailed the deal as a pivotal moment for the company.

 “This partnership brings together Tolaram’s deep expertise in manufacturing and distribution with Diageo’s exceptional brand-building and innovation capabilities. It positions Guinness Nigeria for robust growth in this dynamic market,” she said. 

 Adebayo Alli, Managing Director and CEO of Guinness Nigeria echoed these sentiments, expressing enthusiasm for the collaboration. “This announcement marks an exciting chapter for Guinness Nigeria. Tolaram’s alignment with our values and commitment to sustainability and enduring business success bodes well for our future,” Alli stated. 

 Haresh Aswani, Managing Director of Tolaram Africa, expressed his excitement about the strategic acquisition. “Welcoming Guinness Nigeria, a company with such a rich legacy and strong consumer loyalty, into our ecosystem is thrilling. This move will expand our significant footprint in the Nigerian market and leverage our combined strengths to foster innovation,” Aswani noted. 

 The announcement comes at a challenging time for Guinness Nigeria as the company recently reported a loss after tax of N61.7 billion for the nine months ending March 31, 2024, a stark contrast to the N5.9 billion profit in the same period the previous year.  

 Despite a 28% year-on-year revenue growth to N220.3 billion, significant foreign exchange losses, totaling N83 billion, and a pre-tax loss of N60.5 billion have severely impacted the company’s financial health. 

 The financial strain has wiped out Guinness Nigeria’s retained earnings, pushing the company into a negative equity of N4.7 billion.

 The interest expenses on loans and borrowings surged by 490% year-on-year to N5.6 billion, compounding the fiscal challenges. Despite these setbacks, Guinness Nigeria remains optimistic about its future.

 The company is focusing on innovation and operational excellence to navigate the financial turbulence and is confident in its resilience and strategic vision for long-term sustainability and shareholder value. 

Following the acquisition, Guinness Nigeria will continue to be listed on the Nigerian Exchange Ltd.

 However, Tolaram also intends to launch a mandatory takeover offer, complying with local law requirements, which will provide existing shareholders an opportunity to exit or participate in the company’s restructured future. 

 Industry watchers will see this strategic partnership between Tolaram and Diageo as a significant development in the Nigerian beverage industry, combining robust local expertise with global brand leadership to drive future growth and innovation.

 It could also assuage government officials who will worry about yet another major exit of a multinational. 

 Diageo’s decision to exit its controlling stake in Guinness Nigeria follows a broader trend observed among multinational corporations operating in Nigeria. In recent years, several major multinational organizations (MNOs) have exited the Nigerian market amidst challenging economic conditions.  

Recently, Kimberly-Clark and GlaxoSmithKline (GSK), announced their exit from the market citing economic challenges as primary reasons for their departure. 

However, Diageo’s strategy differs markedly from its peers. Instead of a complete withdrawal, Diageo has opted to pass control to Tolaram, a company with a substantial presence and deep understanding of the Nigerian market.  

This approach ensures continuity and leverages Tolaram’s established local expertise to navigate the complex economic landscape. 

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