Some capital market stakeholders on Monday said that the proposed business consolidation between Nigerian Breweries (NB) Plc and the Consolidated Breweries Plc would enhance shareholders’ return on investment.
They said in separate interviews with the News Agency of Nigeria (NAN), in Lagos, that they were in support of the merger following its projected contribution to the economy and national employment profile.
Alhaji Gbadebo Olatokunbo, founding member of Nigeria Shareholders Solidarity Association, said that the business consolidation would increase the Nigerian Breweries’ market share of the nation’s brewery market.
Olatokunbo, who commended the merger, said that the company’s cost of business would be minimised and impact positively on profitability.
According to him, the merger will ensure the company has adequate capital to fund all investments required to operate competitively.
He said that the company should ensure enhanced dividend to the shareholders during the post merger era to compensate them for their support.
Olatokunbo, however, urged other companies listed on the nation’s bourse to emulate the Nigerian Breweries and Consolidated Breweries initiative to upscale their growth.
Mr Bayo Adeleke, General Secretary, Independent Shareholders Association of Nigeria (ISAN), described the merger as part of the expansionist policy of NB.
Adeleke said that the merger would enable the company to gain more market share and become a dominant player in the breweries sector.
According to him, the minority shareholders are in support of the merger because of its overall positive impact on the economy and investors.
Mr Boniface Okezie, President, Progressive Shareholders Association of Nigeria (PSAN), said that the merger would bring a lot of benefits to the shareholders.
Okezie said that the larger entity would enhance investors’ dividends and drive higher capital appreciation of the equity.
“The two giant breweries are going to increase the market share in terms of production which will make the products available all over the country,” Okezie said.
According to PSAN boss, the issue of non availability of products will be a thing of the past and it will also help check proliferation in the beer market.
Also speaking, Mallam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., said that the merger was part of expansion programme of the company to consolidate in the industry.
Kurfi, who described the merger as a welcome development, said that it would inject new life in the general operations of Consolidated Breweries.
He also urged most companies listed on the exchange to emulate the business approach of Nigerian Breweries by ensuring resuscitation of other moribund companies in the market and economy.
The proposed merger, according to the Court Ordered Meeting (COM) obtained by NAN, showed that the scheme if approved by shareholders on Dec. 10 would be completed in January 2015.
The scheme of arrangement revealed that both companies would continue to operate as separate entities until they obtain regulatory approvals.
It added that the proposed merger would create value for all key stakeholders, enhances operational efficiencies, increased access to capital, liquidity for shareholders and increased market capitalisation.
NAN recalls that Heineken Group International, the core investors in Nigerian Breweries in 2005 acquired a controlling stake in Consolidated Breweries Plc.
The Group had earlier said that the merger of the two companies was to take advantage of Nigeria’s growing beer market and malt drinks.
Meanwhile, the shareholders of both companies would on Dec. 4, 2014 take a decision on the merger proposal to be tabled by two companies’ board in a Court Ordered Meeting.
Under the scheme of arrangement, as proposed by the two companies’ boards, five shares of Consolidated Breweries would be exchanged for four of NB shares. (NAN)
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