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Champion Breweries notifies NSE of Consolidated Breweries’ acquisition bid

Champion Breweries plc has notified the Nigerian Stock Exchange (NSE) that Consolidated Breweries plc is having discussions in connection with a proposed acquisition of 57 percent of the issued share capital of Champion Breweries plc, held by Montgomery Ventures Inc. of Panama.

Consolidated Breweries plc, a subsidiary of Heineken NV Champion Breweries, said that the discussions, “if successful, could lead to a transaction that will be subject to the relevant legal and regulatory approvals, and will notify The Exchange as it becomes aware of further details.”

It will be recalled that The Netherlands-based brewer, Heineken NV, had announced in January 2011 that it bought a controlling interest in five breweries in Nigeria, a move that most analysts see as a strategy to quickly expand its presence in Nigeria - considered one of the world’s biggest beer markets yet to be fully explored.

The acquisitions, according to agency reports, raise Heineken’s market share in Nigeria to approximately 68 percent, giving it a capacity of close to 16 million hectoliters.

Though Heineken did not provide an estimate of the value of the deal when it was announced in January, a report in the Washington-based Wall Street Journal had quoted an analyst at SNS Securities Richard Withagen as saying it was worth more than $649 million or N101 billion. Company spokesman John Clark said Heineken acquired the breweries through a competitive auction process.

Heineken already owns the Star and Goldberg brands in Nigeria, where its main rival is SABMiller plc. SABMiller and Diageo plc, which markets its Guinness stout in the country, couldn’t immediately be reached to comment on whether they were involved in the auction.

Nigeria’s beer market, in a country with a population of about 150 million, has grown nine percent annually for the past 10 years. Heineken estimated that the total size of the Nigerian beer market was 16.5 million hectoliters in 2009. The five breweries will increase Heineken’s capacity by 3.7 million hectoliters.

ING analyst Gerard Rijk said the purchase is a good move as it will reduce Heineken’s competition and enable the company to expand in a highly profitable market. Mr. Rijk estimates Nigeria is responsible for around two thirds of Heineken’s profit in Africa.

Heineken plans to consolidate the newly acquired breweries into its existing Nigerian business structure in 2011. Heineken already own majority stake in Nigerian Breweries Plc.

19 Apr. 2011

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