Nigerian Breweries Plc is considering paying N7.01 billion for the proposed acquisition of 80% economic and voting rights in Distell Wines and Spirits Nigeria (DWSN) and 100% of Distell’s import business in Nigeria is ₦7.01 billion, its transaction document obtained by MarketForces Africa revealed.
Following the acquisition of Distell Group Holdings Limited in South Africa by Heineken N.V., the Board of Nigerian Breweries Plc received an offer from Heineken Beverages (Holdings) Limited for the brewer company to acquire Heineken Beverages’ business and operations in Nigeria.
Explaining the benefits of the deal in its document, NB Plc said the transaction is expected to provide access to a complimentary multicategory portfolio of fast-growing brands in the wines and spirits market segment and capture the significant growth opportunities in that market.
The document added that the transaction would also eliminate any potential conflict between two controlled subsidiaries of Heineken in Nigeria, that is, between Nigerian Breweries and DWSN.
If the deal scales through with shareholders’ approval, DWSN will become a subsidiary of Nigerian Breweries. Also, the operations of Nigerian Breweries will be expanded to include importation, marketing and distribution of wines, spirits and cider products.
On price consideration for the acquisition, Nigerian Breweries said in the document that it has access to the necessary financial resources to close the deal. The company boasts about a cash balance of ₦21 billion as of 30 September 2023, according to data from its financial statement.
DWSN was incorporated in Nigeria on 8 March 2018 as a private company limited by shares. The principal activities of the company are to carry on the business of production and distribution of wines, spirits ciders and any other ready-to-drink (RTD) alcoholic and non-alcoholic beverages.
The company operates from a 1.4-hectare site in Ikeja, Lagos State, and currently utilises distributors across the country who distribute its products across thousands of outlets.
In the full year ended 30 June 2023, DWSN generated a net revenue of ₦4.9 billion, and Earnings before Interest Taxation, Depreciation and Amortisation of ₦667 million.
Distell International Holdings Limited owns 80% of the company while Ekulo International Limited and Next International Limited control 10% each. Its financial report for 2023 shows that the company was facing pressure. Its sales and profit nosedived while its equity position turned red.
DSWN recorded more than N3 billion loss in 2023 as sales declined to N4.857 billion, more than 2% below N4.958 billion posted in the comparable period in 2022.
Spooked by negative retained income of more than N2.7 billion, DWSN’s balance sheet broke, recording an accumulated loss of N832 million. In the last three years, DWSN’s profit has been nosediving amidst tight macroeconomic conditions in the Nigerian market.
