Heineken NV (HEIA), the world’s third-biggest brewer, said it plans to merge its two units in Nigeria, pooling the country’s industry leader with the no. 3 beermaker.
Nigerian Breweries Plc and Consolidated Breweries Plc will combine to become more efficient, Amsterdam-based Heineken said today in a statement. The Dutch company holds 54.1 percent of the former, whose brands include Heineken and Star, and 53.8 percent of the latter, the maker of beers such as Turbo King.
The combination is “based on a significant and compelling strategic rationale” and will allow the companies to tap growth in sub-Saharan Africa’s second-largest beer market, Heineken said. Benefits will come from economies of scale such as combined purchasing of raw materials or deliveries, it said.
Lagos-listed Nigerian Breweries (NB) was incorporated in 1946, producing its first bottle of Star lager in 1949. The company has eight breweries and two malting plants. Consolidated Breweries, majority owned by Heineken since 2005, ranks behind Guinness Nigeria Plc (GUINNESS) in the country’s beer market.
Regulatory approval may take several months, and the businesses will operate as usual until then, Heineken said. Nigerian Breweries will remain listed after the merger, it said.
Heineken competes with Diageo Plc and SABMiller Plc in Nigeria, which has been wracked by political upheaval and economic uncertainty. Brewers are looking to tap booming economic growth in emerging markets.
Heineken reported “low double-digit” percentage growth in volume in its fiscal first quarter on April 24.
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