Nigerian Breweries aims to acquire an 80 per cent stake in Distell Wines & Spirits Nigeria Limited by the end of the first half of the year.
The Managing Director/Chief Executive Officer of NB Plc, Hans Essaadi, revealed this on Wednesday at the firm’s pre-AGM media briefing in Lagos.
The brewer disclosed that it would be shutting down two of its nine breweries in Nigeria as part of a company-wide reorganisation on its strategic recovery plan.
NB, which has been operating in the Nigerian market has been battling foreign exchange losses, as the country continues to struggle with dollar scarcity.
It firm said, “The tough business landscape characterised by double-digit inflation rates, naira devaluation, FX challenges and diminished consumer spend has taken its toll on many businesses, including ours.
“This is why we have taken the decision to further consolidate our business operations for efficient cost management and optimal use of our resources for future sustainable growth.”
“The final part of the transaction is being completed at the South African end with the expectation that the transaction would be completed in full in the second quarter of this year.
“This is a strategic acquisition that is in furtherance of our beyond beer agenda and which would provide us with a complimentary multi-category portfolio and strengthen our market share in the wider beverages market. More importantly, it will help us to future-fit our business and enhance our long-term profitability through the addition of new products in the wines, spirits, and flavoured beverages categories,” he said.
In June 2023, NB revealed plans to acquire an 80 per cent stake in Distell Wines and Spirits Nigeria Limited as part of efforts to capture significant growth opportunities in the wines and spirits segment of the brewing industry.
According to the announcement contained in a notification of the proposal sent to Nigeria Exchange Limited and signed by the company secretary, Uaboi Agbebaku, the company received the offer from Heineken Beverages Limited to acquire an 80 per cent majority interest in Distell Wines & Spirits Nigeria Limited.
Essaadi also revealed that its majority shareholder, Heineken NV, was committed to taking its share of the rights issue when it opened.
Heineken NV holds about a 57 per cent stake in NB.
“The first thing we can do is (address) the rights issue. There is a FX debt that we have on our books and the volatility is something we have to get rid of. We are one of the largest listed companies in Nigeria; we need to have some form of predictability.
“We hope that things will get better, but we also don’t know. So, it is a matter of turning our FX loan into local debt, and reducing the debt level is important, if we think of the fundamentals. Heineken NV has committed to putting money in, which is a testament to the trust and confidence that Heineken has in Nigerian Breweries and Nigeria.
“The fundamentals in this market remain poor, but we believe in the long term. This is the largest economy in Africa. It’s got a youthful population, and its growing urbanisation climate is a recipe for success in the future, but we need to weather the storm, so we must take the measures now to future-proof our business.”
According to Essaadi, part of future-proofing is how NB ensures that it follows the trends, adding that consumer needs are changing and doing so rapidly in the market.
“We took some bold stops and we are holding on. Yes, we have faced some storms and we have faced unprecedented losses driven by FX but we are ready to face the future. I believe we can get over this matter, some folks never waste a good crisis, we are not wasting a good crisis,” he enthused.
