A United Arab Emirates (UAE) based firm has committed to retaining all 10,120 employees of Lipton Teas and Infusions Kenya and Limuru Tea as it acquires controlling stakes in the two tea firms from a British company, allaying fears of job losses.
The Competition Authority of Kenya (CAK) said UAE-incorporated B Commodities ME, which is a subsidiary of Sri Lanka’s Brown Investments PLC, has committed to preserving all the current jobs as it acquires 98.56 percent stake of Lipton Teas and Infusions Kenya and 51.99 interest in Limuru Tea.
The CAK approved the proposed deal that will see B Commodities buy the stakes from British firm Ekaterra Holdco UK Limited and keep all the 9,715 employees of Lipton Teas and 405 employees of Limuru Tea under their current terms at the time of the transaction.
“As per the parties’ submissions, this transaction will not elicit negative public interest concerns. Specifically, there will be no employment loss,” said CAK in approving the transaction unconditionally.
The approval comes after Ekaterra and B Commodities on May 6, 2024, entered into a share purchase agreement. Under the deal, B Commodities will acquire various Ekaterra affiliates and subsidiaries in East Africa including the 98.56 percent stake in Lipton Kenya. B Commodities’ acquisition of Lipton Kenya will, however, also give it an indirect controlling stake of 51.99 percent stake in Limuru Tea, which is listed on the Nairobi Securities Exchange (NSE).
The UAE firm also controls LOLC Kenya Microfinance Bank, Browns Plantations Kenya Limited, and Browns P1 Limited.
The deal with Ekaterra will see B Commodities’ market share in the production and processing of tea in Kenya more than double to 10.7 percent from 4.7 percent, according to CAK analysis of the impact of the transaction. CAK said the transaction is unlikely to hurt competition in the market.
“In the authority’s view, this increase is unlikely to raise any competition concerns. The merged entity will face competition from the other players controlling 89.3 percent of the market. Further, the transaction will not affect the structure and concentration of the market for the production and processing of tea in Kenya,” said the regulator.
Currently, Kenya Tea Development Agencies has the largest market share (48.8 percent) in tea production and processing in Kenya, followed by Lipton (six percent), Browns Plantation Kenya (4.7 percent), and Eastern Produce Kenya Limited (5.6 percent).
Williamson Tea Kenya Limited and Sasini Limited, both listed on the NSE, have a market share of 4.3 percent and 1.2 percent respectively. Sotik Tea (1.3 percent, Evergreen Ltd (1.3 percent), and Nandi Tea Estates (1.2 percent) follow them. The rest have stakes below one percent.
Last month, Ekaterra convened a special general meeting for shareholders to allow it to convert a Sh18.59 billion loan in Lipton Teas and Infusions Kenya into equity. Lipton had tapped the loan from Ekaterra to fund working capital requirements.
In Kenya, Lipton’s estates include 11 plantations and eight factories in Limuru, Kericho, and Bomet counties, assets that had earlier been owned by Unilever, before being bought by CVC Capital Partners.
Sri Lanka’s Browns Investments announced in early May this year that it had agreed to buy Lipton Tea companies in Kenya, Tanzania, and Rwanda from their UK and Netherlands-based parents.
Browns said it entered into a sales and purchase agreement with Ekaterra Holdco UK Limited, Netherlands-based Ekaterra Group Holdings BV, and Ekaterra Group Holdings 2 BV to buy the firms.
Filings to the Colombo Stock Exchange showed the deal would give Browns control of 100 percent of Lipton Teas and Infusions Rwanda Limited and 100 percent of Lipton Teas and Infusions Tanzania Limited.
Browns were also going to buy 98.56 percent of Lipton Teas and Infusions Kenya which has an estate area of 14,100 hectares and an annual production volume of 33 million kilogrammes in the country.
