Kenya-based branded alcohol beverage business East African Breweries Ltd. (EABL) has reportedly acquired an extra 30% stake in Tanzanian subsidiary Serengeti Breweries Ltd. for USD 55 million, bringing its total ownership to 85%.
The company had previously revealed plans to increase shareholding in Serengeti Breweries in March 2020, after identifying lucrative growth opportunities for spirits and beer businesses in the Tanzanian market.
According to EABL Managing Director, Jane Karuku, the company acquired shares from a minority shareholder, which increased their stake from the original 55% to 85%.
U.K-based drinks group Diageo, which is a majority shareholder in EABL, disclosed that the company had acquired 13.3% and 16.7% stakes in Serengeti Breweries in October and November 2020 respectively, for a consideration of USD 55 million in cash and USD 22.25 million in outstanding loans.
Serengeti was also a major beneficiary of EABL’s USD 13 million capital investment during the year ended June 2021, primarily aimed at the Moshi plant which has been touted to be a major driver for its spirits business.
Ms. Karuku revealed that the subsidiary has been seeing continued growth spurred by investment behind brands as well as capacity expansion for local spirits and beer production throughout the past year.
Serengeti’s revenue increased by 15% year-on-year, with beer (10%) and spirits sales recording double-digit growth, sources claimed.
Earlier in July 2019, the giant brewer had bought an additional stake of 3% in the Tanzanian unit for USD 3 million, raising its ownership to 55%. Before this, EABL had owned just 51% of the Tanzanian brewer but had a larger stake in terms of earnings and assets at 72.5%.
Notably, EABL’s constant bid to increase its ownership in Serengeti via acquisitions of minority shareholding has courted controversy in the past, with the Tanzanian government resolutely protecting minority interests in the company.
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