Nigerian Breweries Market Cap to Hit $7.3bn Post Merger

The market capitalisation of Nigerian Breweries (NB) Plc will hit a new high of $7.3bn after its proposed merger with Consolidated Breweries (CB) Plc, THISDAY findings have revealed.
Although pricing details have not been provided by the companies, THISDAY analysis showed that the deal will make Nigerian Breweries the most capitalised equity on the Nigerian Stock Exchange (NSE).
Consolidated Breweries currently trades on the Over-the-Counter (OTC) market at around N77.5 per share and it has outstanding shares of around 496.1 million shares.
Its market capitalisation is at around N38.5 billion ($237 million) while Nigerian Breweries Plc’s market cap is currently around $7.0 billion.
As such, the market capitalisation of the combined entity is estimated to be around $7.3 billion. Meanwhile, experts at FBN Capital have predicted that Nigerian Breweries will offer a high enough premium on the shares of Consolidated Breweries Plc to woo shareholders to sell and prevent a repeat of GlaxoSmithKline-like saga witnessed in the capital market last year.
FBN Capital also stated that the new combined entity will have a wider product portfolio covering all the major beer segments and will give Nigerian Breweries more exposure to the value segment.
“While NB exerts dominance in the mainstream and premium beer market with its flagship product Star and others such as Heineken and Gulder, Consolidated Breweries is a strong player in the value segment of the market with products like Turbo King and 33 export lager beer.
“In terms of market share, we estimate NB’s market share at around 63 per cent of the market and around 6-7 per cent for Consolidated. As such, the combined entity should have a commanding market share of almost 70 per cent of the Nigerian beer market, “said FBN Capital.
The added: “Historically the Nigerian beer market has typically grown unit volumes by around 10 per cent y/y on average. However, since 2012, the market has come under pressure due to a combination of factors including a squeeze on consumer wallets due to the partial removal of petrol subsidies and price increases implemented by the brewers.
“In addition, the mainstream segment of the beer market has come under pressure as consumers downtrade to cheaper products. We understand that the value segment is presently growing at around 30 per cent y/y compared with the low single digits being delivered by the premium segment.
“Expected synergies from the combination include economies of scale from the joint purchasing of raw materials, but more importantly, the leveraging of established distribution channels of NB to ensure wider market penetration for CB products. We expect the market to react positively to the news this week.”
Nigerian Breweries Plc had last week, announced a proposed merger with Consolidated Breweries Plc. Both are subsidiaries of Heineken NV in which the latter holds equity stakes of 54.1 per cent and 53.85 respectively. According to information from the firm, post-merger the combined entity will remain listed as Nigerian Breweries Plc. 

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