takeover Businessman to raise stake in firm to 100pc from the current 49pc
Businessman Chris Kirubi is set to complete the takeover of Haco Tiger Brands East Africa by mid this month, becoming the sole shareholder of the company.
Mr Kirubi in 2008 sold a 51 stake in the firm — then trading as Haco Industries — to South Africa’s Tiger Brands for more than Sh300 million.
A recent disagreement over the company’s strategic direction saw Mr Kirubi offer to buy out the multinational.
The Competition Authority of Kenya (CAK) has approved the takeover.
“With regards to the Haco disposal, all suspensive conditions have been fulfilled and the transaction is expected to close within the next two weeks,” Tiger Brands announced in a regulatory filing last week.
“On November 23, 2017, Tiger Brands was notified that the transaction regarding the disposal of Haco had been approved by the competition authorities in Kenya. The estimated profit or loss on disposal is not expected to be material.”
The multinational did not disclose the expected proceeds from the sale. Mr Kirubi also declined to reveal the buyout price.
Tiger Brands, however, carries its 51 per cent stake in Haco at cost of ZAR45.5 million (Sh341 million).
Mr Kirubi is expected to pay a premium on this amount, raising his stake to 100 per cent from the current 49 per cent.
Doesn't support model
Tiger said it no longer supports Haco’s model of manufacturing and distributing various consumer goods under licence, adding that it wants 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).
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.
Tiger Brands had previously told the Business Daily that it was planning to keep its products on Kenyan shelves, either in partnership with Haco or other companies, following the transaction.
Taking back control of Haco signals Mr Kirubi’s confidence in the company’s future prospects.
Conclusion of the deal is likely to cause a change in the company’s name, which Tiger had rebranded to Haco Tiger Brands to reflect the change of control.