EABL buys further Sh6bn stake in Dar subsidiary

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Companies

Monday August 02 2021

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EABL plant in Ruaraka, Nairobi. FILE PHOTO | NMG

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By CONSTANT MUNDA

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Summary

  • East African Breweries Restricted has executed acquisition of extra 30 p.c stake in Tanzanian subsidiary for $55 million (Sh5.98 billion)
  • EABL, majority-owned by UK’s Diageo, had disclosed realizing to make greater its stake in Serengeti Breweries in March 2020.

East African Breweries Restricted #ticker:EABL has executed acquisition of extra 30 p.c stake in Tanzanian subsidiary for $55 million (Sh5.98 billion), raising its possession to 85 p.c.

EABL, majority-owned by UK’s Diageo, had disclosed realizing to make greater its stake in Serengeti Breweries in March 2020 after figuring out the Tanzanian market as promising for development of beer and spirits business.

“We got one minority shares. We determined to pick them out and they also moreover crucial to promote. The shareholding modified from 55 to 85 p.c,” EABL managing director Jane Karuku acknowledged with out giving extra small print.

British drinks community Diageo disclosed EABL obtained the 30 p.c stake slack last year for $55 million (Sh5.98 billion) in cash and £16 million (Sh2.1 billion) in prominent loans that EABL had earlier extended to the Tanzanian brewer.

“On 21 October 2020 and on 6 November 2020, EABL executed the acquisition of 13.3% and 16.7%, respectively of shares in Serengeti Breweries Restricted for an entire consideration of $55 million (£42 million) in cash and £16 million in the compose of shareholder loans prominent to EABL,”Diageo wrote in a indicate to merchants.

Ms Karuku acknowledged the Serengeti business sustained “robust development via funding in the attend of the brands and ability expansion” for beer and native spirits manufacturing in the year via June 2021.

Earnings in the subsidiary elevated 15 p.c year-on-year, with beer (10 p.c) and spirits gross sales growing by double-digit.

The Serengeti used to be a chief beneficiary of the wide brewer’s Sh7.8 billion capital funding in the year ended June 2021, largely centered on the Moshi plant which EABL has identified as a chief player in its development contrivance for the spirits business.

The deal for the extra stake in the Tanzanian unit adopted one other acquisition of four p.c in July 2019 for $3 million (about Sh326.1 million below prevailing substitute price), raising the brewer’s stake to 55 p.c.

EABL’s expose to grow its stake in Serengeti via acquisition of minority shareholders has in the past courted controversy, with Tanzanian authorities aggressively conserving minority curiosity.

Final year’s transaction raised its accurate and economic possession in the subsidiary to 55 p.c and 74.5 p.c respectively.

Sooner than the July 2019 deal, EABL owned a 51 p.c stake in Tanzanian brewer, however had a greater claim in the case of sources and earnings at 72.5 p.c.

This used to be a outcomes of dialog of Sh15.3 billion loans receivable from Serengeti into equity in the year ended June 2018.

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