Kirubi completes buyback of Haco from South African firmThursday February 22 2018
Businessman Chris Kirubi has taken back full control of Haco Tiger Brands East Africa after acquiring Johannesburg-based Tiger Brands’ 51 per cent stake in the fast moving consumer goods manufacturer.
Mr Kirubi in 2008 sold the stake in the firm –then trading as Haco Industries— to the multinational for more than Sh300 million.
“As previously reported, all suspensive conditions with regard to the disposal of Haco Tiger Brands (E.A.) Limited were fulfilled and the transaction was successfully concluded in December 2017,” Tiger Brands said in a trading update.
Mr Kirubi, who travelled to the United States for treatment in November, says he plans to grow Haco as the sole owner.
“I’ll just improve it (Haco) more and more,” he said in a telephone interview, declining to reveal the cost of buying out Tiger Brands.
The businessman is, however, expected to have paid a major premium to take back control of Haco, based on a similar divestiture made by Tiger Brands in Ethiopia.
The multinational carried its 51 per cent stake in Haco at a cost of R45.5 million (Sh392 million).
Mr Kirubi offered to buy out Tiger Brands after the partners disagreed over the company’s strategic direction.
An Sh845 million fraud was also discovered at Haco in 2015, hurting the multinational’s consolidated earnings.
READ: Kirubi to take full control of Haco as CAK okays buyout
The accounting fraud, in the form of pulling forward sales and falsification of stocks, cost Tiger Brands R50 million (Sh430 million) at group level as the subsidiary sunk into an undisclosed loss in the year ended September 2015.
Tiger said it no longer supported Haco’s model of manufacturing and distributing various consumer goods under licence, adding that it wanted to focus on its own fast moving consumer goods brands.
Haco has agreements with several multinationals to manufacture and sell their brands in Kenya and East Africa.
The company, for instance, deals in Palmer’s Cocoa Butter (under licence from E.T. Brown Drug Company) and BIC ball pens (Societe BIC) and washroom cleaner Jeyes Bloo (Jeyes Plc).
READ: Haco accounts fraud costs SA parent Sh312m
Tiger said the entrenched partnerships that Haco has developed over the years have made it difficult to boost the uptake of its brands, including Purity (baby food), Ingram’s (personal care) and Tastic (cereals) in East Africa.
Mr Kirubi, on the other hand, believes in the current model that has helped Haco grow since its establishment in the early 1970s, prompting him to buy out Tiger Brands to maintain the status quo.
Haco is now expected to shed the Tiger Brands moniker that it acquired from the multinational.