Guinness Nigeria Shares rises on Tolaram Take over

Guinness Nigeria’s share price gained about 8.41%, closing at N54.80 on June 11, 2024, from an opening of N50.55.  

The gain is coming on the heels of an announced takeover of Guinness Nigeria by Tolaram. 

Earlier today, it was announced that Tolaram will acquire Diageo’s 58.02% stake in Guinness Nigeria and establish long-term licensing and royalty agreements for the ongoing production of the Guinness brand.

Diageo’s locally manufactured ready-to-drink and mainstream spirits brands will also be licensed to the company. 

An observation of the trading window displays immense buying pressure by investors on Guinness Nigeria stocks. During trading, there was a turnover volume of 178,098 with a turnover value of N9.8 million. 

Guinness Nigeria shares performance this year  

This year, Guinness Nigeria like other breweries listed on the NGX has endured massive declines. For example, Guinness Nigeria has posted a year-to-date decline of 23.4%, with its share price starting the year at N66.  

Other listed breweries, International Breweries have posted a year-to-date decline of 16.7%, Nigerian Breweries, a 22.2% YTD decline, and Champion Breweries, a year-to-date decline of 32.5%.  

The bearish performance of these stocks this year is linked to the massive losses posted by these companies. For example, Guinness Nigeria posted a pre-tax loss of N60.5 billion for the nine months ending March 31, 2024.

Financial state of breweries in Nigeria  

International Breweries posted a pre-tax loss of N97.3 billion in FY 2023, and for Nigerian Breweries, the group posted a pre-tax loss of N144.7 billion in FY 2023.  

The massive losses posted by these companies are linked to the immense depreciation of the Naira in 2023, with rising operational costs linked to record inflation figures.  

For shareholders, the significant losses reported by these companies, leading to accumulated retained losses, suggest that dividends may not be paid in the coming years. 

For most of the breweries, capital-raising efforts have been put in place, as their losses have eaten into their capital reserves.

Nigerian Breweries is planning to launch a N600 billion rights issue programme, as the group seeks to settle some of its trade payables and other current liabilities.  

International Breweries is also raising capital, as the group is at the concluding phase of its N588 billion rights issue. International Breweries issued 161.172 billion shares, with the rights issue expected to end on June 10.  

The situation for Guinness Nigeria stands apart. While parent companies of other breweries, such as AB InBev for International Breweries Plc and Heineken NV for Nigerian Breweries Plc, are demonstrating confidence in their subsidiaries through debt-to-equity conversions and capital infusions via rights issues, Diageo International is choosing to exit Guinness Nigeria. 

However, there is optimism that the new majority shareholder, Tolaram, will support Guinness Nigeria through strategic cash infusions.

Additionally, the company is expected to leverage the broader Tolaram ecosystem to benefit from economies of scale. 

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Crypto’s Richest Billionaire Doubled His Net Worth Behind Bars

Binance founder Changpeng Zhao, already the richest person to go behind bars and the wealthiest person in crypto many times over, Zhao’s net worth has soared since he became a felon.

Forbes now estimates that he is worth $61 billion, making him the 24th richest person in the world, just after Julia Koch and family. The next richest person in crypto is Coinbase founder Brian Armstrong at $11 billion.

CZ’s upward revision has two components. First, his 90% equity stake in Binance, the large crypto exchange, is valued at $33 billion despite CZ stepping down as CEO in November 2023 as part of a settlement with the U.S. Department of Justice in which he pled guilty to anti-money laundering and sanctions violations. His company also paid a $4.3 billion fine to the government. However, the impact on Zhao’s personal wealth was less severe, since he only had to pay a $50 million fine. In the six months since his plea.

Binance  increased its dominance among crypto exchanges worldwide in terms of trading volume (though it was excluded from Forbes’ list of the most trustworthy crypto exchanges.) According to data compiled from The Block, its share of the total spot market across exchanges has increased to 42% in the six months since he left the company from an average of 38% in the two months before his settlement.