Nigerian Breweries (NB) Plc has initiated a venture to acquire two Nigerian subsidiaries of Heineken, valued at approximately N7.01 billion, to consolidate the operations of Heineken and its affiliates in Nigeria.
NB, primarily owned by Heineken B.V, is pursuing an 80% stake in Distell Wines and Spirits Nigeria (DWSN) Limited and a 100% acquisition of the import business from Heineken Beverages (Holding) Limited.
Upon completion of the transaction, DWSN will transition into a subsidiary of NB, expanding NB’s operations to encompass the importation, marketing, and distribution of wines, spirits, and cider products.
The board of directors at NB has expressed its intent to recommend the proposed acquisitions to shareholders, contingent on a review affirming fair terms and alignment with the company’s interests.
A meeting of NB shareholders is slated for next month to deliberate and endorse resolutions authorising the proposed acquisitions.
The proposed acquisition aligns with NB’s strategic objective of diversifying its product range beyond beer to include wines, spirits, and flavoured alcoholic beverages, providing growth opportunities and long-term profitability, as stated by NB.
In the outlined transactions, the acquisition of DWSN grants NB an 80% economic interest, voting rights, and other privileges in DWSN. Simultaneously, the 100% acquisition of the import business affords NB the exclusive right to import all Heineken Beverages’ wines, spirits, and cider brands from South Africa, along with licensing rights for marketing, distribution, and potential local production in Nigeria.
Established in 2018, DWSN engages in local manufacturing, marketing, and sales of a portfolio of wines and ready-to-drink (RTD) beverages, operating under license from Heineken Beverages. Heineken Beverages holds an 80% equity stake in DWSN, with the remaining 20% split between Next International Limited and Ekulo International Limited.
Heineken Beverages’ import business in Nigeria involves importing, marketing, and distributing a broad range of wines, spirits, and RTD beverages from South Africa through locally appointed distributors.
In the fiscal year ending June 30, 2023, DWSN reported a net revenue of N4.9 billion and an earnings before interest, taxation, depreciation, and amortisation (EBITDA) of N667 million.
The NB board asserts that the acquisition will grant access to a complementary multi-category portfolio in the wines and spirits market, capturing growth opportunities while mitigating potential conflicts between Heineken’s controlled subsidiaries in Nigeria.
This strategic move is expected to enhance NB’s market share, broaden its product offerings, and contribute to long-term profitability by tapping into the growth potential of wines, spirits, and flavoured beverages, surpassing the expected growth rate of traditional beer categories. The board foresees accelerated growth for DWSN’s portfolio through NB’s robust route-to-market capabilities and envisions opportunities for expedited volume growth and increased local production of wines and spirits on NB’s platform.
