NIGERIA – Nigerian Breweries Plc, one of the biggest beer makers in the country, has proposed to acquire 80 percent of Distell Wine & Spirits Nigeria Limited after an offer from Heineken Beverages Limited South Africa.
Nigerian Breweries disclosed on Nigerian Exchange Limited that the board was presented with an offer from Heineken Beverages Holdings Limited of South Africa, for it to acquire the majority interests in Distell Wine & Spirits Nigeria Limited that the latter is looking to offload.
Distell International Limited is fully owned by Heineken Beverages. In turn, Distell International Limited owns 80 percent shareholding in Distell Nigeria.
“The Board resolved to consider the offer in detail with support from external legal and financial advisers and thereafter make a decision thereon in the coming weeks,” the document said.
Distell Nigeria locally produces still and sparkling wines as well as ciders, in addition to imported wines, spirits, and flavored alcoholic beverages from the parent company in South Africa.
“This acquisition will also allow Nigerian Breweries to provide offerings to a new and younger generation of the consumer market,” FBNQuest analysts said in a note.
“Nigeria’s demographic profile suggests that a significant proportion of the population will become adults over the next decade.”
The analysts expect the acquisition to be a value accretive for Nigerian Breweries. “The deal offers new growth prospects for Nigerian Breweries; the company has struggled to deliver robust profits in recent quarters.”
Nigerian Breweries reported a net loss of N10.7 billion in the quarter to March, with total assets standing at N652.9 billion.
The approach from Heineken Beverages presents Nigerian Breweries with the chance to also branch out into the manufacturing of such products, none of which is present in its portfolio of around 22 brands, according to the information on its website.
“With younger alcohol drinkers more interested in spirits and wines, we believe the proposed transaction provides new growth drivers for Nigerian Breweries,” FBNQuest analysts added.
Nigerian Breweries has a broad portfolio that includes beers, stout, and non-alcoholics. However, the company does not have any presence within the wines or spirits segments, hence this acquisition to expand its product offerings.
Acquisition of property, plant, and equipment for 2022 came to N97.9 billion up from N59.4 billion a year earlier, its audited earnings report showed.