Recession: Diageo makes u-turn on Guinness shares

The British multinational alcoholic beverages company, Diageo Plc, has called off its initial plans to buy about 15.7 percent of the shares capital of Guinness Nigeria due to what it describes as challenging market conditions in Nigeria over the past 12 months.

A statement by Guinness Nigeria said that the decision by the international company to reverse its initial offer was contained in a letter through its wholly owned subsidiary, Guinness Overseas Limited.

The letter reads that the company proposes to focus its resources on continuing to support Guinness Nigeria.

It reads in part, “Diageo has confirmed that it maintains a positive outlook for Nigeria in the long-term and that it expects the market to continue to grow. Nigeria remains a key strategic market for Diageo which remains supportive of Guinness Nigeria, a company with long and rich history, its board and management and the actions taken by Guinness Nigeria to mitigate the impact of challenging market conditions”.

Diageo plc had in September 2015 approached the board of Guinness Nigeria PLC with a roughly $208 million offer to increase its stake in the listed Nigerian company that houses Diageo’s beer brands in the country.

Diageo had offered to increase its stake in Nigerian Stock Exchange- listed Guinness Nigeria—which houses brands like Guinness, Harp and Malt—to 70% from 54.3% as the world’s largest spirits company looks to wield more control over its African business.

Diageo is a global leader in beverage alcohol with an outstanding collection of brands including Johnnie Walker, Crown Royal, JεB, Buchanan’s and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness.