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Heineken to launch N3.06b full takeover bid for Champion Breweries

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Heineken B.V, the majority core investor in Nigerian Breweries Plc and Champion Breweries Plc, may soon launch a full takeover bid for minority shares in Champion Breweries after the global breweries giant closed a N4.95b deal to increase its majority equity stake in Champion Breweries to 84.97 per cent.
Transaction details and regulatory filings at the Nigerian Stock Exchange (NSE) showed that Heineken, through its wholly-owned Nigerian subsidiary, Raysun Nigeria Limited, acquired N4.95 billion shares from local investors to increase its controlling equity stake in the Akwa Ibom State-based Champion Breweries.
A total of 1.90 billion ordinary shares of 50 kobo each of Champion Breweries were crossed to Raysun Nigeria Limited at N2.60 per share through the negotiated window of the NSE. The new transaction represents 24.27 per cent of the issued share capital of Champion Breweries.
Prior to the latest acquisition, Heineken, through Raysun Nigeria Limited, held 60.7 per cent majority equity stake in Champion Breweries. Akwa Ibom State held 10 per cent equity stake while other Nigerian shareholders held 29.3 per cent equity stake.
Market sources said the new transaction and increase in majority equity stake to 84.97 per cent may trigger the Mandatory Tender Offer (MTO) clause of the capital market and lead to free float deficiency.
Section 131 of the Investment and Securities Act (ISA) and Rule 445 of SEC make it mandatory for any institution or person that acquires at least 30 per cent of a company to make an MTO to other minority shareholders.
The underlying reason is to allow other shareholders to determine or benefit from the value accretion of the transaction and avoid locking up minority shareholders at the convenience of major shareholders’ dealings.
MTO is traditionally made at the price of the underlying transaction that triggered the MTO.
Champion Breweries has 7.829 billion ordinary shares of 50 kobo each, with Heineken, through Raysun Nigeria, now holding some 6.652 billion ordinary shares of 50 kobo each, leaving about 1.177 billion shares in the hands of other shareholders.
Market pundits said the new transaction has created deeper free float deficiency for Champion Breweries.
Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any individual or institutional shareholder holding a statutorily significant stake, which is five per cent and above in Nigeria.
Under the rules at the NSE, Champion Breweries, which is quoted on the main board of the Exchange, is required to have a minimum free float of 20 per cent of its market capitalisation, implying that 20 per cent of the companies’ shareholdings must be available for minority retail shareholders.
Sources said there were indications that Heineken might consider delisting or merger to cure the free float deficiency and unlock further synergies.
Shareholders of Champion Breweries had earlier clamoured for the merging of the company with Nigerian Breweries in order to create synergies that could deliver greater values to all stakeholders.
They had cited the consolidation in the breweries sector which placed multiple-entities strategy in disadvantage with major investors such as SABMiller and Diageo consolidating their operations in Nigeria to create critical mass that can drive turnover in the increasingly competitive market.
Champion Breweries’ principal activities include contract brewing services to Nigerian Breweries as well as brewing and packaging of Champion Lager Beer and non-alcoholic Champ Malta.

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