AFRICA (Zimbabwe Investor) – Heineken N.V. has filed a pre-merger notification with the Nigerian Securities and Exchange Commission notifying the intention of their majority owned subsidiaries Nigerian Breweries and Consolidated Breweries to merge their two businesses.
“The proposed merger is based on a significant and compelling strategic rationale and will enable the combined business to fully capitalise on the future growth potential of the highly attractive Nigerian beer and malt drinks market” read an announcement released by Heineken.
Regulatory and other approvals are expected to take several months, and until these have been obtained both businesses will continue to operate as usual.
“Africa is one of the world’s most attractive and fastest growing regions for beer, and is a key platform for Heineken’s continued investment and future growth”, noted the announcement.
Nigeria is the continent’s largest economy, with a significant, growing beer and malt drinks market, underpinned by favourable demographics.
Pan-African investment managers Imara see the merger entrenching NB’s position as the dominant brewer in Nigeria.
“We believe this deal makes a lot of sense for Nigeria Breweries (NB) shareholders as it will give it more exposure to what is currently the fastest growing segment of the market, the value segment, where Consolidated Breweries is estimated to be the market leader with the widest brand portfolio” said Imara who have a ‘hold’ recommendation on the stock of NB currently trading at a price-to-earnings ratio (P/E) of 26.12 times.