SABMiller Africa sells stake in Kenyan brewer

East African Breweries (EABL) has agreed to buy a 20 percent stake in its Kenyan unit from SABMiller’s African unit for 19.53 billion shillings (USD 225 million), EABL said on 6 June 2011.

As part of a wider deal to undo their reciprocal financial ties EABL will sell its own 20 percent stake in neighbouring Tanzania Breweries (controlled by SABMiller) through a public offer.

Britain’s Diageo, which majority-owns EABL, announced in 2009 its intention of ending a brewing and distribution deal with SABMiller. SABMiller huffed and puffed and dragged Diageo to a London court. In the end they reached an agreement which led to the disentangling of ties as announced in June 2011.

EABL and SABMiller entered a deal some 10 years ago which allowed SABMiller to sell EABL brands through Tanzania Breweries in Tanzania, with EABL reciprocating and brewing and marketing SABMiller products in Kenya.

“EABL ... has agreed to purchase all of SABMiller Africa BV’s 20 percent shareholding in Kenya Breweries Limited (KBL) for cash consideration of the US dollar equivalent of 19,528,062,600 Kenyan shillings, subject to disposal of its 20 percent shareholding in Tanzania Breweries Limited by way of public offer”, EABL said in a statement published in Kenyan newspapers.

“KBL has also agreed to terminate a brewing and distribution agreement with SABMiller International BV and will cease to distribute SABMiller’s brands in Kenya after a short transitional period”, it said.

While EABL now happens to be the almost uncontested leader in the Kenyan beer market, SABMiller’s Tanzanian Brewers have to put up with competition from EABL/Diageo in Tanzania, where in late 2010 EABL acquired a 51 percent stake in another Tanzanian brewer, Serengeti Breweries, at a cost of USD 60.4 million according to media reports.

The SABMiller-Diageo saga goes to show: deals are made in heaven and destroyed on earth.