Diageo eyes $208 mln deal to boost stake in Nigerian Guinness unit
(Rewrites story throughout with details, share price)
By Oludare Mayowa and Chijioke Ohuocha
LAGOS, Sept 9 (Reuters) - Drinks company Diageo Plc (LSE: DGE.L - news) on Wednesday announced plans to buy extra 15.7 percent shares in its Nigeria subsidiary for up to 41.37 billion naira ($208 million), taking its equity stake to 70 percent, Guinness Nigeria said.
Guinness said its parent firm, which currently own 54.3 percent, was in the process of launching a partial tender offer to existing shareholders and would also buy extra shares through the stock market at a maximum of 175 naira per share.
Diageo would be looking to acquire additional 236.4 million shares. The tender price represents a 40 percent premium to its closing price of 124 naira on Tuesday, Guinness said in a statement.
Shares (Berlin: DI6.BE - news) in Lagos-listed Guinness Nigeria, which has lost 25.5 percent so far this year, gained 5 percent to 131.48 naira each after the news, outperforming the broader stock index down 2.85 percent after JP Morgan's bond index expulsion moves.
It (Other OTC: ITGL - news) said the local brewer would continue to be listed on the Nigerian Stock Exchange after the deal which is still subject to regulatory approvals.
Multinationals from Anglo-Dutch consumer group Unilever (Amsterdam: UZ8.AS - news) to British drugmaker GlaxoSmithKline Plc (Other OTC: GLAXF - news) have bought more stakes in their Nigeria units, shrugging off the prospects of a weaker domestic economy and worries over a six-year old insurgency largely in the Muslim north.
Diageo's intentions comes as pretax profits in Nigeria are falling, amidst rising competition particularly from rival brewer Heineken (Other OTC: HEINY - news) and a consumer segment squeeze in the wake of dwindling government revenues after crude prices plunged.
Industry sources said Diageo was taking a bet on Nigeria's future given its relatively young population of 170 million people and the possible shift to a consumer-driven market from its economy's current reliance on the oil sector .
Last week Guinness reported an 8 percent fall in pretax profit to 10.8 billion naira for 2015 and proposed a dividend.
($1 = 199.00 naira) (Additional reporting by Alexis Akwagyiram; Editing by Jermey Gaunt)