Diageo wins auction for Meta Abo Brewery
Words fail us when looking at the prices paid by international brewers for Ethiopia’s privatised breweries. Early in September 2011 it was reported that Diageo, the world’s major spirits company, submitted the highest bid for Ethiopia’s state-owned Meta Abo Brewery.
Diageo is said to have offered USD 225 million for 100 percent of Meta Abo. SABMiller with SouthWest Development (SWD) bid USD 190 million, while Heineken offered USD 188 million, local media said, citing Ethiopia’s Privatisation and Public Enterprise Supervising Agency.
Earlier this year, the privatisation agency had called off an auction for a stake in Meta Abo, which it had put on the block in a joint venture with the government.
Even then Diageo was said to have submitted a staggering USD 200 million bid for the Meta Abo, while Heineken came second with an offer of close to USD 100 million.
In an interesting twist to the tale, Diageo, which is also the majority owner (50.3 percent stake) of East Africa Breweries (EABL), decided to go alone for Meta Abo, dashing the Kenya-based firm’s hopes of entering the market. The transaction marks a shift in strategy for Diageo, which in the past had preferred to use EABL as its vehicle in the East Africa region.
Meta Abo is the number three brewer in Ethiopia with a 15 percent market share. Although the privatisation agency did not reveal at how much they valued Meta Abo, the agency has estimated Meta Abo’s sales volume for the 2009/10 fiscal year at 355,550 hl beer and its profit before tax at 38.6 million Br (USD 2.2 million).
It will be the last brewery to be sold to private investors following the sales of Bedele and Harar breweries to Heineken in May 2011.
Having lost out in all brewery auctions, SABMiller and SWD are reported to be wanting to build a beer plant around Holeta town, 40 km to west of the capital of Addis Ababa, at a cost of USD 60 million.
