Nigeria’s SevenUp bottling company gets $60 million takeover offer

Affelka, majority shareholder of Nigeria’s Seven-Up bottling company, has offered $60 million (19.33 billion Naira) to buy out current minority shareholders.

The buyout is aimed at restructuring the struggling company.

Affelka is the privately held investment firm owned by the Lebanese El-Khalil family and it has offered to pay 112.70 naira per share for the minority stake of 171.5 million shares. This is an 18% premium to Thursday’s share price of 95.50 Naira

SevenUp bottling company was set up 57 years ago and has the license to bottle PepsiCo’s Pepsi, SevenUp and Mirinda in Nigeria.

In a phone conversation with Reuters, Seven-Up vice chairman Sunil Sawhney said, “As of now we have received an offer from the majority shareholder of the company. It’s a financial restructuring.” He said the company has been making losses for some time and that the deal was aimed at restructuring the bottler, which distributes PepsiCo’s 7up, Pepsi and Mirinda-branded drinks.

Based on the news, the company’s shares rose by 5% from 92.5 Naira, valuing the company at 59.6 billion naira ($186.25 million).

The soft drinks bottling industry has been hit by slow demand arising from weak economic growth in Nigeria, Africa’s most populous nation, which has just emerged from a recession and a currency crisis which stifled raw material imports.

Sawhney, who joined the company in a management change this year, said delisting Seven-Up from the stock exchange after the takeover would be “logical”. The takeover is subject to shareholder and regulatory approvals, he said.

Profits at Seven-Up started to decline in the first three months of 2015 just before Nigeria slipped into its first recession in a quarter of century triggered by low oil prices.

Seven-Up then posted its first loss in half-year 2016 and since then losses have widened. It reported a 6.26 billion naira pretax loss in the first six months of 2017.