Second Kenyan company bags lucrative Tanzanian deal months after Maghufuli death

Supporters of the late Tanzanian president praised his economic policies saying that they protected Tanzanian businesses from aggressive foreign competition by outside companies. His critics however, accused him of protectionism, claiming that his policies were hard on businesses outside Tanzania trying to establish a presence in the country. Whatever the case may have been, one thing is clear; an unstoppable Kenyan corporate onslaught on the Tanzanian market seems to be now well underway.

Just about a month after a Kilifi company won the rights to supply the country with medical equipment, now, East African Breweries Limited has effectively taken over its Tanzanian subsidiary after raising its stake in Serengeti by 15% percent to have an 85% percent share in the company.

Ms Karuku said the Serengeti business sustained “strong growth through investment behind the brands and capacity expansion” for beer and local spirits production in the year through June 2021.
Revenue in the subsidiary increased 15 percent year-on-year, with beer (10 percent) and spirits sales growing by double-digit.

The Serengeti was a major beneficiary of the giant brewer’s Sh7.8 billion capital investment in the year ended June 2021, largely targeted at the Moshi plant which EABL has identified as a major player in its growth strategy for the spirits business.
The deal for the additional stake in the Tanzanian unit followed another acquisition of four percent in July 2019 for $3 million (about Sh326.1 million under prevailing exchange rate), raising the brewer’s stake to 55 percent.

EABL’s bid to grow its stake in Serengeti through acquisition of minority shareholders has in the past courted controversy, with Tanzanian government aggressively protecting minority interest.
Last year’s transaction raised its legal and economic ownership in the subsidiary to 55 percent and 74.5 percent respectively.

Before the July 2019 deal, EABL owned a 51 percent stake in Tanzanian brewer, but had a larger claim in terms of assets and earnings at 72.5 percent.
This was a result of conversation of Sh15.3 billion loans receivable from Serengeti into equity in the year ended June 2018.

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    Written by Joshua Wanga

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