EABL to dispose of its glass making arm

A quality control inspector at work on East African Breweries Ltd bottling line at Ruaraka. EABL is to dispose of its subsidiary Central Glass Industries to Consol, a South African firm, at an undisclosed price. FILE PHOTO | NATION MEDIA GROUP 

In Summary

• According to the information memorandum, CGI management is currently building a new furnace at a cost of Sh1.2 billion. Over 20 per cent of its exports go to Uganda, Tanzania, Ethiopia, Rwanda, Burundi, Eritrea, Seychelles, Réunion, Mauritius, Zimbabwe, Zambia and Angola.
• Analysts at Standard Investment Bank said proceeds from the sale are likely to go towards reducing the significant debt of $200 million EABL accumulated from the 2011 purchase of a 20 per cent stake in Kenya Breweries Ltd from SABMiller, a South African beer manufacturer.

By JOSHUA MASINDE
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East African Breweries Ltd is to dispose of its subsidiary Central Glass Industries to Consol, a South African firm, at an undisclosed price.

In a statement released yesterday, the brewer said the company board of directors had approved the sale of the entire 100 per cent stake.

“The sale is conditional, amongst other things, on EABL receiving regulatory approvals from the Competition Authority of Kenya and the approval of shareholders of EABL at an extraordinary general meeting that will be called specifically for this purpose,” said the brewer.

Central Glass, one of EABL’s seven subsidiaries, was established in 1987 to produce glass containers for distribution across East Africa.

According to the information memorandum, CGI management is currently building a new furnace at a cost of Sh1.2 billion. Over 20 per cent of its exports go to Uganda, Tanzania, Ethiopia, Rwanda, Burundi, Eritrea, Seychelles, Réunion, Mauritius, Zimbabwe, Zambia and Angola.

Consol, on the other hand, has a glass processing capacity of about a million tonnes a year. The firm’s major shareholders include Brait Private Equity, Old Mutual and Sanlam.

Analysts at Standard Investment Bank said proceeds from the sale are likely to go towards reducing the significant debt of $200 million EABL accumulated from the 2011 purchase of a 20 per cent stake in Kenya Breweries Ltd from SABMiller, a South African beer manufacturer.

“We also think the sale will be positive for CGI, with brewing competitors in Kenya unlikely to be comfortable making purchases at a unit wholly owned by EABL.

Keroche Breweries for example, has just launched a new plant with a capacity of 600,000 beer bottles a day and the ability to produce 30 beer brands,” SIB analysts said on the development yesterday.