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Kwal staff begin buying winery shares at Sh34

A machine operator at the Kenya Wine Agencies Ltd. The government is selling 3.84 million shares in the firm to employees. PHOTO | FILE
A machine operator at the Kenya Wine Agencies Ltd. The government is selling 3.84 million shares in the firm to employees. PHOTO | FILE 

Employees of Kenya Wine Agencies Ltd (Kwal) have started buying shares set aside for them as the State executes a plan to sell off its stake.

Kwal staff is buying a four per cent share in the wines and spirits maker at Sh34.46 a unit under the privatisation programme.

The Privatisation Commission said the government is offloading the 3.84 million shares in Kwal in a deal that would see the National Treasury rake in Sh132.3 million in the employee stock ownership plan (Esop).

The Esop deal is expected to close in May and comes seven months after the government disposed of another 26 per cent stake in Kwal to South African firm Distell for Sh860 million.

“Sale of four per cent shareholding to Kwal staff is on-going through an employee share ownership plan and is expected to be complete in April or May 2015,” said Solomon Kitungu, chief executive at the commission.

The wine maker has about 235 employees, but the privatisation agency did not disclose the allocation criteria to be applied. The commission, however, said it would ensure the sale benefits all workers in the company.

“Allocation is under discussion. The commission will ensure that equity is maintained,” said Mr Kitungu, who revealed the employees were not given a discount on the pricing of the share sale.

The government, through the Industrial and Commercial Development Corporation (ICDC), previously owned a 72.65 per cent shareholding in Kwal.

ICDC remains Kwal majority shareholder with a 42.65 per cent stake after selling Distell 26 per cent late last year, Centum at 26.43 per cent, with employees are set to hold the balance.

On concluding sale to employees the Treasury will have received Sh992.3 million from privatisation of Kwal and stands to earn at least Sh1.4 billion when it disposes of the remaining stake in the wines, spirits and flavoured alcoholic beverages producer and marketer.

“The sale of the balance of the ICDC shares is to be done within two to four years once value of the remaining shares has improved,” the agency said in an update.

Kwal employees, however, face the prospect of illiquid stock given the shares for now do not trade at the Nairobi Securities Exchange even over-the-counter.

Distell had for 15 years used Kwal as an exclusive distributor for its products in Kenya, which include brands as Amarula, Viceroy, Hunter’s, Drostdy-Hof and Nederburg. These Distell brands contribute about 60 per cent of Kwal revenue.

Kwal iconic brands include Kingfisher, Kibao Vodka, Hunters Choice, Simba Cane, Beehive brandy, Yatta grape juice and Yatta wines.

The company enjoyed a monopoly in manufacturing and distribution of wines and spirits until liberalisation of the Kenyan economy in 1992/1993, exposing Kwal to stiff competition from other players.

Kwal is now locked in a head-to-head battle for market share with rivals such as East African Breweries Ltd, Keroche, London Distillers, Wines of the World and Africa Spirits that manufacture or market imported alcoholic beverages.

Kwal was founded in 1969 and established its first commercial winery in 1982. The Yatta Vineyard, a subsidiary of Kwal, is located in Machakos County, where it grows grapes used in manufacturing of wines and juices.

It has a 6.25 per cent stake in listed retailer Uchumi Supermarkets.

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