INTBREW in merger talks with Intafact Beverages, Pabod Brewer

International Breweries PLC (INTBREW) has given notice of a proposed merger with Intafact Beverages Limited and Pabod Breweries Limited.

The merger, which has since been approved by the board of International Breweries PLC is pending regulatory approvals.

The merger between the three Anheuser Busch Inbev subsidiaries is expected to provide additional competition in the beverage market dominated by Nigerian Breweries and Guinness.

 

Meanwhile, the shares of INTBREW closed at N24.07 per unit Wednesday, June 7, 2017 at the Nigerian Stock Exchange in Lagos, a remarkable improvement of about 30% for the year.

However, year-to-date, International Breweries shares have shed -5.8% and have underperformed the broad index, which is down -2.4% last year. 

It will be recalled that the NSE recently, published International Breweries’ Q3 2017 (end-Dec) results, which was unexpectedly positive.

While sales of N9.2bn grew by 46% y/y, PBT and PAT advanced by 44% y/y and 43% y/y to N2.0bn and N1.4bn respectively.

The company reported a -634bp y/y gross margin contraction to 48% and a 30% y/y increase in operating expenses.

On a sequential basis, sales grew by 40% q/q, which we attribute to seasonality. The end-Dec quarter is usually one of the strongest quarters for the brewers.

The PBT and PAT compare with the pre-tax and post-tax loss of –N216m reported in Q2 2017 (end-Sept). Despite a 15% q/q rise in operating expenses, the strong q/q bottom line was driven by an -85% q/q decline in net interest expense and 112bp q/q expansion in gross margin.