Tolaram to buy majority stake in Guinness as Diageo cuts Nigerian operation

Guinness Nigeria says Tolaram, producers of Indomie Instant Noodles, will acquire Diageo’s 58.02 percent shareholding in the firm.

The deal is contained in a statement filed on the Nigerian Exchange (NGX) Limited on Monday, and signed by Abidemi Ademola, company secretary of Guinness.

The brewer said under the terms of an agreement signed on June 11, Tolaram entered into long-term licence and royalty agreements for the continued production of the Guinness brand and its locally manufactured Diageo ready-to-drink and mainstream spirits brands.

It was learnt that Tolaram, which boasts of a 50-year presence in Nigeria, will acquire Diageo’s equity stake at a price of N81.60 per share.

According to the NGX filing, the transaction is expected to be completed during fiscal 2025, subject to obtaining the requisite regulatory approvals in Nigeria.

“Diageo remains deeply committed to Nigeria and will retain ownership of the Guinness brand, which will be licensed to Guinness Nigeria for the long-term, enabling the next phase of growth and development of Guinness Nigeria under the stewardship of Tolaram,” the statement reads.

“With a five-decade presence in Africa, Tolaram is one of the largest consumer packaged goods companies on the continent and has forged joint venture partnerships with several leading consumer multinational companies.

“In partnership with Guinness Nigeria and Tolaram, Diageo will continue to drive the brand and marketing strategy for Guinness in Nigeria, to ensure Diageo’s exceptional capabilities in brand building and innovation continue to drive long-term growth for Guinness in Nigeria.

“Following completion of this transaction, Guinness Nigeria will remain listed on the Nigerian Exchange Ltd. and, subject to regulatory approvals, Tolaram intends to launch a mandatory takeover offer in compliance with local law requirements.”

Commenting on the deal, Omobola Johnson, board chair of Guinness Nigeria, said the announcement represents a significant opportunity for the next phase of growth for the company.

“This partnership brings together Tolaram’s deep expertise in manufacturing and distribution, and Diageo’s exceptional capabilities in brand building and innovation. I believe this is a winning combination which leaves Guinness Nigeria extremely well placed to drive further growth in this market,” Johnson said.

On his part, Adebayo Alli, managing director and chief executive officer (CEO) of Guinness Nigeria, said “Today’s announcement marks an exciting moment for Guinness Nigeria, our employees and our customers”.

“I look forward to working alongside Tolaram, which is one of the largest and most respected consumer goods companies in Africa, and I am pleased to note Tolaram’s alignment with Guinness Nigeria’s values and its strong commitment to build an enduring and sustainable business,” he said.

Haresh Aswani, managing director of Tolaram Africa, said the company would be thrilled to welcome Guinness Nigeria, a company with such a rich legacy and strong consumer loyalty, into our ecosystem.

He said the strategic move will expand the company’s significant footprint in the Nigerian market and presents an opportunity to leverage “our combined strengths to foster innovation”.

Aswani also said the acquisition would deliver immense value to their customers and shareholders.

Diageo’s shareholding sale to Tolaram comes across as part of its plan to cut operations in Nigeria. Diageo is the maker of popular products like Johnnie Walker and Baileys.

On October 5, 2023, Guinness announced plans to stop the sales and importation of the products in April due to Diageo’s plan to establish a new, wholly-owned spirits-focused business in the Nigerian and African markets.

However, on March 26, Guinness said the plan to stop importing the products has been extended to 2025, stressing that is taking longer than expected, hence the change in date.