- East African Breweries Ltd(EABL) proposes to acquire an additional 30 percent shareholding in Serengeti Breweries
- EABL is expected to spend at least $18.7 million on the purchase of extra stake
East African Breweries Ltd(EABL) last week has advised its investors that it proposes to acquire an additional 30 percent shareholding in Serengeti Breweries Ltd (SBL) Tanzania, subject to regulatory approvals in the respective countries.
EABL is expected to spend at least $18.7 million on the purchase of an extra stake in Serengeti Breweries though the company has not disclosed the value of the deal. Last year, EABL bought an additional 4 percent of the share capital of SBL for $3 million, increasing its shareholding to 55 percent. On the successful completion of the acquisition proposal, EABL’s legal shareholding in SBL will go up to 85 percent, from the existing 55 percent.
EABL has been facing revenue challenges in Kenya and Ugandan markets due to stringent regulations and high taxes to regulate the consumption of alcohol. The Kenyan government hiked excise taxes on beer and spirit to 5.2 percent and 15 percent respectively, making these drinks expensive. The repeated hikes in excise taxes in Kenya negatively impacted its business, particularly bottled beer brands, which posted one percent fall in sales.
SBL has become EABL’s fastest-growing business in the region accounting for 12 per cent of the total sales in the half-year ended December 2019 led by higher sales of its Serengeti Lite brand. During this period, EABL’s net profit increased by 9 percent to $72 million from $66 million in the same period in 2018, with net sales in Tanzania growing by 19 percent compared with 10 percent and eight percent in Uganda and Kenya respectively. However, Tanzania’s overall contribution to the group’s performance is the lowest. Its main market, Kenya accounted for 71 percent and Uganda 16 percent. The Tanzanian market has shown positive growth potential prompting EABL to increase its shareholding in SBL. In Tanzania, SBL has three processing plants spread out across Tanzania in Dar es Salaam, Mwanza and Moshi.
