The deal, which has been disclosed by EABL’s parent company Diageo Plc, was completed in July last year following the approval from Tanzania’s Fair Competition Commission.
EABL’s effective ownership in Serengeti following the latest transaction was not immediately clear.
It has previously hovered between 51 percent and 72.5 percent, depending on a blend of factors.
East African Breweries Limited (EABL) #ticker:EABL spent Sh300 million ($3 million) to acquire an additional four percent stake in Serengeti Breweries Limited, raising its ownership in the Tanzanian subsidiary.
The deal, which has been disclosed by EABL’s parent company Diageo Plc, was completed in July last year following the approval from Tanzania’s Fair Competition Commission.
EABL’s effective ownership in Serengeti following the latest transaction was not immediately clear.
It has previously hovered between 51 percent and 72.5 percent, depending on a blend of factors.
These include the treatment of Sh15.3 billion that EABL lent to Serengeti and the pace at which minority investors in the subsidiary can provide their share of capital.
“On 29 July, 2019, EABL completed a purchase of four percent of the share capital of Serengeti Breweries Limited for $3 million (Sh300 million),” Diageo said in its results for the six months ended December.
“This increased Diageo’s effective shareholding (in Serengeti) from 39.2 percent to 40.2 percent.”
Diageo holds a stake of about 51 percent in EABL and the Nairobi Securities Exchange-listed firm’s move to raise its ownership in Serengeti has the impact of also boosting the UK multinational’s interest in the Tanzanian firm.
Serengeti is a promising subsidiary for EABL, having accounted for 12 percent of the total sales in the year ended June 2019. Net sales from this unit rose 20 percent during this period.
Diageo sees more potential in the East African region where sales grew by 10 percent in the half year to December 2019, driven by strong growth in spirits and beer. “Beer net sales grew 10 percent led by strong growth in Serengeti in Tanzania, Senator in Kenya, and the launch of Guinness Smooth in Kenya,” said Diageo.
Prior to the latest disclosures, EABL had announced that Serengeti’s minority investors were to inject an additional capital of Sh3.2 billion into the company.
EABL in June 2018 converted the Sh15.3 billion loan to Serengeti to ease the Tanzanian company’s debt burden.
This saw its stake in the subsidiary rise from the previous 51 percent to 72.5 percent.
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