East African Breweries Ltd (EABL) has declared that it intends to buy the remaining 1.81 percent stake of Uganda Breweries Limited (UBL), its Ugandan subsidiary, to boost its interest in the company.
At the moment, the Kenyan brewer owns 98.19 percent of UBL. EABL guaranteed that there would be no pressure on shareholders who decide not to sell their shares by stating in a tender notice that the offer would be made on a “willing buyer, willing seller” basis.
The notice disclosed: “If any shareholder does not wish to accept the tender offer and wishes to continue to remain a shareholder in UBL, then such shareholder does not need to take further action.”
As of September 2, 2024, all holders of common shares may participate in the tender offer, which ends at 5:00 p.m. on March 3, 2025. The purchase price of UGSH5,630 (US$1.51) per ordinary share has been fixed by EABL.
If the tender offer is fully accepted, EABL will become the sole owner of UBL after acquiring 120,471,208 common shares. The move by EABL to acquire whole ownership of UBL is consistent with its overarching plan to concentrate its holdings in strategic areas.
East African Maltings (Uganda) Ltd. and International Distillers Uganda Ltd. are wholly owned subsidiaries of the corporation. Uganda continues to be an important market for EABL, having a major impact on its earnings.
Continuing, Uganda is EABL’s second-largest market after Kenya, per the company’s most recent financial results, BrandSpur digital news platform reports.
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EABL reported net sales of KES124.1 billion (US$963.88 million) for the fiscal year that ended in 2023, a 13 percent increase from the year before.
The corporation saw a 12 percent growth in the beer segment and a 10 percent increase in the spirits area. Kenya made almost 65 percent of regional sales, with Uganda coming in second at 21 percent and Tanzania at 14 percent.
The acquisition of the remaining UBL stock by EABL is consistent with the actions of Diageo, the company’s parent, which raised its ownership of EABL from 50.03 percent to 65 percent in March 2023.
Diageo acquired a 14.97 percent stake through its subsidiary Diageo Kenya. The acquisition cost KES192 (US$1.49) per unit, or 118.4 million shares, making the total deal valued at KES22.7 billion (US$176.3 million).
However, there were two oversubscribed phases to the acquisition.
