The proposed merger between Nigerian Breweries, NB Plc and Consolidated Breweries if consolidated will enhance Nigerian economy, according to analysts. alcoholAnalysts argued that the consolidation of the two companies will enhance the revenue base of government through payment of higher tax. NB has stated that the proposed merger is expected to create a platform for improved efficiency and economies of scale resulting from the streamlining of operations.
The enlarged company is expected to efficiently manufacture products of both entities through the combined operational capacity of both companies.
According to NB, “Products will also be sold and distributed across the entire combined sales and distribution network of the two companies. Cost savings from increased efficiency in procurement, supply chain management and support functions are expected to ultimately enhance shareholder value.”’
Analysts had stated that the Consolidated Breweries shareholders will become shareholders of a larger and highly profitable entity. Synergies created as a result of the merger will create additional value for shareholders.”
It was gathered from sources close to NB that shareholders unwilling to be part of the enlarged company will have the option to receive cash for their shares and make alternative investments as they deem fit.
On liquidity for shareholders:
It was learnt that the Scheme of Merger provides Consolidated Breweries shareholders with a more liquid stock.
Nigerian Breweries is a listed company with its shares traded on the Nigerian Stock Exchange, NSE, Consolidated Breweries is not.
Several analysts had opined that shareholders of Consolidated Breweries will enjoy the benefit of holding shares in a liquid company listed on the NSE, noting that the proposed merger will ensure that Consolidated Breweries’ quality brands are marketed and distributed nationwide, hence creating more value for all stakeholders
On the economies of scale, the proposed merger will provide a platform where the enlarged company can benefit from economies of scales in procurement, distribution and manufacturing of all the products on offer. “We expect the benefits accruing from these to accrue to all stakeholders” an analyst said.”
It has been gathered that following the Securities and Exchange Commission, SEC approval of the scheme of merger and subsequent approval of the Federal High Court, Nigerian Breweries Plc and Consolidated Breweries Plc have commenced preparations for their separate Court Ordered Meetings (COM) to seek shareholders consent to the proposed merger.
The Notice of Meeting has been published and both companies have commenced dispatch of the scheme of merger documents to all shareholders.
Both Court Ordered Meetings have been scheduled for Thursday, 4th of December 2014. While COM for shareholders of Consolidated Breweries Plc will hold at the Lagoon Restaurant on Ozumba Mbadiwe Street, Lagos. The COM for shareholders of Nigerian Breweries Plc will be held at Zinnia Hall, Eko Hotel, Adetokunbo Ademola Street, Lagos.
Content of separate Court Ordered Meetings
It was gathered that the proposal to be placed before the shareholders is to combine the operations of Consolidated Breweries and Nigerian Breweries into a single legal entity effected through a Scheme of Merger. The surviving entity of the merger will be named “Nigerian Breweries Plc”.
On how has the value of both companies been determined for the purpose of this proposed merger, it was gathered that Nigerian Breweries Plc and Consolidated Breweries Plc have been advised by separate independent financial advisers in determining their fair values and the financial details for the expected combination of the two businesses.
Meanwhile, an independent fairness opinion was obtained by Consolidated Breweries Plc from Ernst & Young in deciding to proceed with the transaction
On how will the decision to approve the merger proposal be taken by either company, analysts stated that “In line with the Companies & Allied Matters Act, the Scheme of Merger document will be presented to shareholders at separate Court Ordered Meetings. Every attending shareholder or his proxy will be entitled to vote at the meetings. For the proposed merger to be approved, 75 per cent of those shareholders present and voting at the COM will need to vote in its favour.
HEINEKEN NV is the majority shareholder in both companies, hence has the power to ultimately decide whether or not to merge the companies.
On the process for such merger decision to be made, it was gathered that a decision to merge has been taken by the Boards of both companies, in the best interest of each business, its brands and its people.
HEINEKEN is represented on both boards, but does not make these decisions on its own. Ultimately, the proposal to merge will be approved by 75 per cent of the shareholders of the two companies present and voting in separate Court Ordered Meetings. While HEINEKEN as shareholder of these two companies has the right to vote and is in favour of the merger, HEINEKEN has decided not to vote, avoiding any possible doubts on Heineken’s integrity/conflicts of interest in this deal. HEINEKEN’s decision will give the minority shareholders of both companies sole discretion as to whether to approve the proposed merger.
Terms of the merger
The Shareholders of Consolidated Breweries Plc will receive Four (4) ordinary shares in Nigerian Breweries Plc for every Five (5) ordinary shares held in Consolidated Breweries as at the Terminal Date or a Cash Consideration of N120 per share of Consolidated Breweries held.
On why are Nigerian Breweries Plc and Consolidated Breweries Plc embarking on this merger and what are its benefits to shareholders , source close to both companies said
“The Directors of Nigerian Breweries and Consolidated Breweries have decided to align their long-term strategic interests with a view to enhancing the operational efficiencies of both companies thereby maximizing value for all shareholders. This combination will ultimately reduce overheads and enhance shareholder value through the exploitation of various operational synergies. This will result in improved revenues, cost savings and operational efficiencies in the enlarged Nigerian Breweries.
The proposed merger will enable the surviving entity, Nigerian Breweries, efficiently manufacture products of both entities through the combined operational capacity of both companies. Products will also be sold and distributed across the combined sales and distribution network of the two companies.”
The document of the proposed merger when sighted by Vanguard revealed that
if the shareholders approve the merger , it is expect that merger will be completed in January 2015.
According to the merger document “Considering the receipt of SEC approval, Federal High Court approval for the COM, and the fact that both companies are majority-owned by Heineken, the two companies will start collaborating in their business operations. Until all the statutory processes are completed, both companies will continue to operate separately.
VANGUARD
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