Diageo eyes $208 million deal to boost stake in Nigerian Guinness unit
By Oludare Mayowa and Chijioke Ohuocha
LAGOS (Reuters) - Drinks company Diageo Plc on Wednesday announced plans to buy extra 15.7 percent shares in its Nigeria subsidiary for up to 41.37 billion naira (135 million pounds), taking its equity stake to 70 percent, Guinness Nigeria said.
Guinness said its parent firm, which currently own 54.3 percent, was in the process of launching a partial tender offer to existing shareholders and would also buy extra shares through the stock market at a maximum of 175 naira per share.
Diageo would be looking to acquire additional 236.4 million shares. The tender price represents a 40 percent premium to its closing price of 124 naira on Tuesday, Guinness said in a statement.
Shares in Lagos-listed Guinness Nigeria, which has lost 25.5 percent so far this year, gained 5 percent to 131.48 naira each after the news, outperforming the broader stock index <.NGSEINDEX> down 2.85 percent after JP Morgan's bond index expulsion moves.
It said the local brewer would continue to be listed on the Nigerian Stock Exchange after the deal which is still subject to regulatory approvals.
Multinationals from Anglo-Dutch consumer group Unilever to British drugmaker GlaxoSmithKline Plc have bought more stakes in their Nigeria units, shrugging off the prospects of a weaker domestic economy and worries over a six-year old insurgency largely in the Muslim north.
Diageo's intentions comes as pretax profits in Nigeria are falling, amidst rising competition particularly from rival brewer Heineken and a consumer segment squeeze in the wake of dwindling government revenues after crude prices plunged.
Industry sources said Diageo was taking a bet on Nigeria's future given its relatively young population of 170 million people and the possible shift to a consumer-driven market from its economy's current reliance on the oil sector .
Last week Guinness reported an 8 percent fall in pretax profit to 10.8 billion naira for 2015 and proposed a dividend.
($1 = 199.00 naira)
(Additional reporting by Alexis Akwagyiram; Editing by Jermey Gaunt)
