British multinational alcoholic Beverage company Diageo agreed to sell its 58 percent majority shareholding in Guinness Nigeria after entering into a deal with Singapore-based Tolaram Group, Guinness announced Tuesday.
The transaction also requires both parties to enter into long-term licence and royalty agreements to allow for sustained production of the Guinness brand and its locally manufactured Diageo ready-to-drink and mainstream spirits brands.
Tolaram runs joint venture partnerships with several multinational consumer goods companies on the continent, including Colgate-Palmolive and Kellanova, having operated in Africa for half a century and established itself as one of the foremost consumer packaged goods companies.
The company and the China Harbour Engineering Company own a 75 percent interest in the new Lekki Deep Sea Port.
“Today’s announcement represents a significant opportunity for the next phase of growth for Guinness Nigeria,” said Omobola Johnson, chair of Guinness Nigeria.
“This partnership brings together Tolaram’s deep expertise in manufacturing and distribution and Diageo’s exceptional capabilities in brand building and innovation,” she added.
Diageo’s decision to offload its holding in Guinness continues the exodus of multinational firms quitting Nigeria or scaling back their investments in the country, where a protracted shortfall of foreign exchange and sticky price levels, currently at their highest in 28 years, are making the business environment increasingly challenging.
FMCG giants like P&G, GSK, Unilever, and Sanofi have either exited the country or cut back their operations in the past twelve months.
Guinness said the deal is anticipated to be completed during fiscal year 2025 once the regulatory approvals are in place.
Under the terms of the deal, Diageo will retain ownership of the Guinness brand, which will be licensed to Guiness Nigeria in the long term.
“This strategy move will expand our significant footprint in the Nigerian market and presents an opportunity to leverage our combined strengths to foster innovation and deliver immense value to our customers and shareholders across the nation,” said Haresh Aswani, managing director of Tolaram Africa.
Tolaram wants to initiate a mandatory takeover offer in compliance once the transaction is completed.
