Kisii Bottlers chairman John Simba announces the merger of three bottlers, Rift Valley, Mount Kenya and Kisii Bottlers to form Almasi Beverages Limited. Photo/Diana Ngila
Three Coca-Cola bottlers are set to merge seven years after a similar number consolidated into the Embakasi-based Nairobi Bottlers Ltd (NBL).
The bottling factories based in Nyeri, Rift Valley and Kisii will now form a single entity— the Almasi Beverages Limited —with the value of the three expected to rise by 26 per cent to Sh5.7 billion.
“We are moving to form a single entity called Almasi Beverages Limited which will allow us to grow our market and increase our value,” said John Simba, chairman Kisii Bottlers.
Mr Simba was accompanied Dalberg Global Development Advisors, the deal advisor, and some Coca-Cola officials.
Mount Kenya, Rift Valley and Kisii Bottlers operate as distinct companies with own managers, boards of directors and shareholders, but after the merger is complete, a new board and management will take over.
The merger would not entail closure of plants, the officials said. Nairobi Bottlers which was created from Nakuru-based Flamingo Bottlers, Machakos-based East Kenya Bottlers and the old Nairobi Bottlers, led to shut down of the three factories and workers laid off.
The officials said that there will be a reorganisation which may see some employees “assume new roles”, adding that no one would be sacked.
“We will have a new board of directors and new managers who will run the overall functionalities of the business such as procurement and looking for extra capital,” said Mr Simba.
The merger of the three bottling factories comes amid resistance from some shareholders.
Thursdday, Matu Wamae, a shareholder in the Mount Kenya factory opposed the deal which he claimed was spearheaded by Centum and Industrial & Commercial Development Corporation (ICDC)— companies with stakes in the plant.
“I don’t think it is a good idea. How do you merge companies operating in Kisii and Nyeri,?” Mr Matu, a retired former chairman of ICDC who also chairs New KCC said.
“The companies are making profits and I don’t see the point for the merger.”
Centum’s investment manager David Owino said the company had received the proposal from the three bottlers and will submit it to the board in the next few weeks.
The current shareholders of the three bottling plants will be issued new shares.
“When the process is complete all shareholders will be allocated new shares, as of now it’s not easy to say how many shares each shareholder will hold,” said Mr Simba.
Centum Investment owns shares in the three bottlers with 44 per cent stake in Rift Valley, 28.6 per cent in Mount Kenya and 23.8 per cent in Kisii.
The ICDC lists the three bottlers and Centum as some of the companies it holds stake in. The merger will see the new Almasi Beverages become the second largest in market share among the Coca-Cola bottlers with 29 per cent, behind Nairobi Bottlers which controls 48 per cent of market.
Coast Bottlers has 11 per cent market share, Equator 12 per cent, Kisii, nine per cent with Rift Valley and Mt Kenya controlling 10 per cent each.
Coca-Cola remains the leading player in the Kenya’s soft drinks market with a 41 per cent volume share and a 63 per cent share of carbonated drinks, according a recent market report by Euromonitor International.
The bottling plants were established in the early 1970s under the import substitution policy which might explain the notable presence of the political elite in the shareholding.
Besides Mr Simba who is also a former National Bank chairman, Thursday’s statement was signed by Rift Valley director Abraham Kiptanui, a one-time controller of State House and Timothy Tiampati for Mount Kenya.
“The ownership reorganisation…seek to better capture opportunities…develop a strong platform for growth in the non-alcoholic ready-to-drink beverages market in Kenya,” noted the statement.
“Currently we have no ready-to-drink coffee and tea, and that are some of the areas we are looking into and once we merge it will be easy to launch these products,” said Mr Simba.
