EABL’s Serengeti stake up to 74.5pc

East African Breweries Limited plant at Ruaraka in Nairobi. FILE PHOTO | NMG 

By PATRICK ALUSHULA
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Summary

• EABL says it acquired shares equivalent to an additional four percent of the share capital of Serengeti, with the transaction raising its legal and economic ownership in the subsidiary.
• Before this deal, EABL owned a 51 percent stake in Serengeti but had a larger claim in terms of assets and earnings at 72.5 percent.
• EABL’s shareholding in Serengeti has courted controversy in the recent past, with the Tanzanian government aggressively protecting minority shareholders.

East African Breweries Limited (EABL) has raised its effective stake in Serengeti Breweries to 74.5 per cent after acquiring additional shares in the Tanzanian firm for Sh300 million ($3 million).

The brewer says it acquired shares equivalent to an additional four percent of the share capital of Serengeti, with the transaction raising its legal and economic ownership in the subsidiary.

Before this deal, EABL owned a 51 percent stake in Serengeti but had a larger claim in terms of assets and earnings at 72.5 percent.

“Legal shareholding moved to 55 percent but since we are entitled to get 50 percent of dividends from minority shareholders, our effective shareholding moved by two percent,” EABL group finance director Gyorgy Geiszl said.

EABL’s shareholding in Serengeti has courted controversy in the recent past, with the Tanzanian government aggressively protecting minority shareholders.

In the year ended June 2018, EABL announced the conversation of Sh15.3 billion loans receivable from Serengeti into equity. This transaction increased EABL effective interest in Serengeti from 51 percent to 72.5 percent.

However, Tanzanian authorities previously opposed EABL’s acquisition and forced it to pay an unspecified fine to settle alleged flouting of takeover rules.

This led to the agreement that the legal shareholding remains unchanged and that minority shareholders surrender half of their future dividend entitlements as a way of making their share of capital contribution.

EABL, which also has a subsidiary in Uganda, sees subsidiaries as key growth areas and continues to pump in money to increase expansion and also market the brands.

Serengeti remains a promising subsidiary for EABL, having accounted for 12 percent of the total sales in the half year ended December 2019.

Net sales from this unit rose 26 percent during this period, the fastest among the three units, driven by growing interest in Serengeti Lite among consumers.