In a statement signed by Rotimi Odusola, the company secretary, Guinness Nigeria has announced “that Diageo will not proceed with potential offer to increase its equity stake in Guinness Nigeria”.
According to the statement “Guinness Nigeria Plc (“Guinness Nigeria”) hereby notifies the general public that further to its announcement on 9 September 2015 of Diageo plc’s intention to make an offer through its wholly owned subsidiary Guinness Overseas Limited for up to 15.7% of the share capital of Guinness Nigeria (the “Potential Offer”), it has received a letter from Guinness Overseas Limited confirming that it has taken the decision not to proceed with the Potential Offer. In the light of the challenging market conditions in Nigeria over the past 12 months, it proposes to focus its resources on continuing to support Guinness Nigeria.
“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 a long and rich history, its board and management and the actions taken by Guinness Nigeria to mitigate the impact of challenging market conditions”, the statement said.
This might be a further setback for Guinness as the company struggles to clear its books from piling debt. The company recorded a net loss of NGN2 billion.
This is a big fall of -126% in net profit when compared to NGN7,7 billion bottom line for the same period in 2015. A major hole apparent in the financial result as released is its cost of sales.
Two weeks ago, Guinness Nigeria PLC announced the resignation of its Vice Chairman, Nick Blazquez and his immediate replacement with John O’Keeffe. The coming weeks will determine what Guinness would do to raise more capital and stabilize its books.