Nestle Nigeria’s investors losing money, but majority shareholder unfazed

Investors holding Nestle Nigeria’s shares have been losing money, but its majority shareholder, Nestle S.A, seem unperturbed about the accumulating losses as it continues to splash cash on the Nigerian subsidiary.

In the last seven years, Nestle Nigeria has seen investors distancing themselves from its shares, with shareholders dumping stocks in view of the equity turning negative in the capital market.

To limit their exposure to the bearish sentiments, some of the holders of Nestle Nigeria’s shares had reduced their asking price to offload the stocks, resulting to the share depreciating by -13.2% in value year-to-date.

The selloff caused the stock to fall from the N1556.5kobo per share it opened the year with, to N1350 as of September 16, pushing the stock into the bears’ territory.

This wiped over N163.68 billion from shareholders’ investment value, with Nestle Nigeria’s market capitalisation dwindling from N1.23 trillion to N1.07 trillion within seven months.

Read also: Nestle Nigeria gets funding from Switzerland investor after losing N203.7bn

Despite the N163.68 billion loss on the back of sell off among shareholders, Switzerland investor, Nestle S.A, is unmoved, and has been buying the dip to increase its controlling stake in the firm.

As of June 31, 2022, Nestle S.A owned 29.92 million shares in Nestle Nigeria, and 524.55 million shares through Societe Des Produits Nestle S.A, which takes the stake owned by the former to 3.78%, and the latter maintaining 66.18%.

According to trading documents of Nestle S.A obtained by Ripples Nigeria, over five million‬ shares were acquired by the majority investor between August to September 15.

However, the volume of shares acquired this year by Nestle S.A is over 10.34 million, at the cost of over N13 billion, analysis of its trading activities shows. This raises the firm’s total shares held to 34.92 million as of September 15, valued at N47.15 billion, in contrast to the 24.58 million shares it held as of December 31, 2021, valued at N38.26 billion.

The volume of shares acquired this year increases Nestle S.A’s controlling stake to 4.4% from the 3.10% it held as of December 31, 2021, indicating the firm is buying the dip.

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