Guinness’ core investor to exit Nigeria after 75 years amid economic challenges

Wednesday, 12 June 2024 04:42

Guinness’ core investor to exit Nigeria after 75 years amid economic challenges

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Guinness’ core investor to exit Nigeria after 75 years amid economic challenges

After operating in Nigeria since 1950, Guinness’ core investor has announced its departure from the Nigerian market, citing the adverse economic climate.

The company plans to sell its controlling shares to Singaporean conglomerate Tolaram Group.

Between July 2023 and March 2024, Guinness Nigeria recorded a significant loss of N61.9 billion after tax. This financial downturn followed President Bola Tinubu’s decision to float the naira to unify its value across official and parallel foreign exchange markets, a move that backfired and severely impacted multinational companies, including Guinness. The brewery's N61.7 billion loss after tax in Q3 starkly contrasted with the N5.9 billion profit reported in the same period the previous year.

Diageo, Guinness' parent company, likely decided to sell its 58.02% majority stake to Tolaram Group due to the naira's continued depreciation. According to a statement from the company, "Under the terms of an agreement signed today, 11 June 2024, Tolaram will acquire Diageo’s 58.02% shareholding in Guinness Nigeria, along with royalty agreements for the continued production of the Guinness brand and its locally manufactured Diageo ready-to-drink and mainstream spirits brands."

Guinness Nigeria Plc, a publicly listed company on the Nigerian Stock Exchange, was established on April 29, 1950, initially importing Guinness Stout from Dublin. With Tolaram's acquisition expected to conclude by 2025, Guinness will have spent 75 years in Nigeria.

The company’s statement also mentioned that the transaction is anticipated to be completed in fiscal 2025, pending necessary regulatory approvals in Nigeria. Abidemi Ademola, Guinness’s legal director, emphasized that Diageo’s exit from Nigeria will not affect its ownership of the Guinness global brand, which will continue to be licensed to Guinness Nigeria.

Diageo’s departure is part of a broader trend of multinational companies, such as GlaxoSmithKline and Microsoft, Procter & Gamble, etc, exiting Nigeria due to the challenging economic environment.