By Anna Marij Van der Meulen,
AMSTERDAM — Dutch brewer Heineken NV said Wednesday that it has bought a controlling interest in five breweries in Nigeria, as it moves to quickly expand in one of the world's fastest growing beer markets and Africa's second-largest.
The purchase from Sona Group will raise Heineken's market share in the country to approximately 68%, giving it a capacity of close to 16 million hectoliters.
Heineken didn't provide an estimate of the value of the deal, although SNS Securities analyst Richard Withagen estimated it was worth more than €500 million ($649 million). Company spokesman John Clark said Heineken acquired the breweries through a competitive auction process.
Heineken already owns the Star and Goldberg brands in Nigeria, where its main rival is SABMiller PLC. SABMiller and Diageo PLC, which markets its Guinness stout in the country, couldn't immediately be reached to comment on whether they were involved in the auction.
Nigeria's beer market, in a country with a population of about 150 million, has grown 9% annually for the past 10 years. Heineken estimated that the total size of the Nigerian beer market was 16.5 million hectoliters in 2009. The five breweries will increase Heineken's capacity by 3.7 million hectoliters.
ING analyst Gerard Rijk said the purchase is a good move as it will reduce Heineken's competition and enable the company to expand in a highly profitable market. Mr. Rijk estimates Nigeria is responsible for around two thirds of Heineken's profit in Africa.
In the first half of 2010, Heineken's operating margin was 26.6% in Africa, compared with 9.7% in western Europe and 16.3% in the Americas.
Heineken said it will explore the possibility of consolidating the newly acquired breweries into its existing Nigerian business structure in 2011. The acquisition was funded from existing resources, it said.