Diageo Scraps Plans to Raise Stake in Guinness Nigeria
October 05 2016 - 10:33AM
Dow Jones News
By Saabira Chaudhuri
Diageo PLC has ditched plans to raise its stake in Guinness
Nigeria, blaming challenging marketing conditions in the country
over the past year.
Diageo last year said it planned to offer to increase its stake
in the Nigerian Stock Exchange-listed Guinness Nigeria--which
houses brands such as Guinness, Harp and Malt--to 70% from 54.3% in
a roughly $208 million offer. The move would have been a way for
Diageo to wield more control over its African business.
But Nigeria's oil-dependent economy has slowed and Guinness
Nigeria's shares have dropped 35% over the past 12 months.
Guinness Nigeria in a statement late Tuesday said Diageo will
"focus its resources on continuing to support Guinness Nigeria,"
adding that "Nigeria remains a key strategic market" for the
London-headquartered company.
Diageo last month provided Guinness Nigeria with a $95 million
loan. Nigeria makes up roughly 3% of Diageo's revenue.
The reversal comes after Africa's most populous nation has seen
growth slow--recently entering its first technical recession since
2004--following the oil-price crash and a raft of political and
security challenges. Dwindling oil revenue has fed a dollar
shortage in Nigeria, as the government hoards foreign currency to
safeguard shrinking reserves. That has hammered operations for
businesses large and small, leaving factories, supermarkets and
power plants unable to pay for goods.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
October 05, 2016 10:18 ET (14:18 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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