Nigerian Breweries Plc Moves to Acquire Two Subsidiaries of Heineken for N7.01 Billion

Nigerian Breweries Plc has announced its plans to acquire two subsidiaries of Heineken worth a value of about N7.01 billion to strengthen the operations of Heineken and its subsidiaries in Nigeria.

Nigeria Breweries seeks to acquire an 80% shareholding in Distell Wines and Spirits Nigeria (DWSN) Limited and 100% import business from Heineken Beverages (Holding) Limited.

Following the seal of the deal, DWSN will become a subsidiary of Nigerian Breweries, as it will further expand the firm into lines like marketing, importation, and distribution of spirits, wines, and cider products.

The board of directors at Nigerian Breweries said it would propose the acquisitions to shareholders after the reviews highlighted that the investment was in line with NB policy and interests.

Shareholders of Nigerian Breweries are expected to meet next month to consider whether or not the company should proceed with the acquisitions.

The company also said the proposed acquisition aligns with its plans to expand its production beyond beer to include spirits, wines, and flavoured alcoholic beverages. 

“It also provides the company with growth opportunities and long-term profitability,” NB stated.

It was reported that, in line with the transaction, the acquisition of DSWN gives Nigerian Breweries 80% economic interest, voting rights, and other rights in DSWN. In comparison, 100% of the import business gives Nigerian Breweries an exclusive right to import all Heineken Beverages’ wines, spirits, and ciders brands from South Africa, as well as the licence to market and distribute the products in Nigeria, including the right to produce any of the imported brands locally.

At DSWN, Heineken Beverages owns an 80% equity stake, while the other 20% is owned by Next International Limited and Ekulo International Limited, which hold a 10% share each. Heineken Beverages' 80% equity stake is contained in the name of Distell International Holdings Limited.

On the other hand, Heineken Beverages' import business in Nigeria comprises the marketing, importation, and distribution of different types of spirits, wines, and RTD beverages from South Africa through distributors appointed locally.

Based on the year ending June 30, 2023 report, DSWN revealed that its net revenue amounted to N4.9 billion and earnings before interest taxation, depreciation, and amortization (EBITDA) of N667 million.

Concerning the plans to acquire DSWN, the board at Nigerian Breweries has this to say, 

• It provides Nigerian Breweries with a complimentary multi-category portfolio. It strengthens the company’s market share in the broader beverages market by expanding its product offerings to a broader consumer segment.

• It enhances Nigerian Breweries’ long-term profitability by adding new product categories, such as wines, spirits, and flavored beverages, projected to grow faster than the lager, malt, and stout types.

• It would accelerate the growth of DWSN’s portfolio through Nigerian Breweries’ broad and strong route-to-market capabilities.

• Migrating part of the imported portfolio to local production on the Nigerian Breweries’ platform presents an opportunity for expedited volume growth and growing the local production of wines and spirits.

Nigerian Breweries Q3 2023 Report

Reports for NB Q3 show that the firm lost N57 billion in Q3 2023, leading the brewing company to slow sales and rising costs.

A fast overview of the breakdown shows that turnover increased by 2.1% in the first nine months of 2023, which ended on September 30, 2023, to settle at N402 billion, which surpassed the corresponding year that settled at N393 billion in 2022, while gross profit declined from N154.53 billion in 2022 to N152.56 billion in 2023. Conversely, operating profit fell from N35.39 billion to N27.26 billion.

NB recorded a pre-tax loss of N78.16 billion in Q3 2023, far from the corresponding year's record that settled at N19.09 billion. After taxes, net loss settled at N57 billion in 2023, against net profit of N14.76 billion in 2022. Earnings per share declined from N1.82 in Q3 2022 to a loss of N6.89 per share in Q3 2023.

However, the group defended their result as they attributed all their losses to the devaluation of the naira.

As of the time of this published article, the price of a Nigerian Breweries share is #40.00 per share