EABL defends Ksh.22B sale of majority shareholding to Diageo

East African Breweries Limited (EABL) has dismissed claims of engaging in any fraudulent activity in the recent sale of additional shareholding to UK-based shareholder Diageo who now owns 65 percent majority stake in EABL.

Appearing before the Senate Standing Committee on Tourism, Trade, and Industrialization, EABL Managing Director Jane Karuku on Thursday defended the sale of 15 percent shareholding to Diageo Kenya Limited stating that it was legally and procedurally done in line with regulations by the Capital Markets Authority (CMA).

Earlier this year, Diageo Kenya Limited acquired an additional 15 percent shareholding in EABL by way of a Public Tender Offer increasing its shareholding in EABL from 50.03 percent to 65 percent.

However, a petition was filed before the Senate by one Nicholas Rono challenging the sale of shareholding which was billed as the single largest foreign direct investment in Kenya in 2023 where a total sum of Ksh.22.8 billion was paid to the market.

The petition alleged of a possible hostile takeover of EABL, with the brewer being accused of going on a spree offloading the company’s assets and drastically reducing its workforce.

In response, the EABL Executive termed the allegations as “false and malicious”, pointing out that the company has not engaged in any corporate downsizing activities within the past decade including during the COVID-19 pandemic period.

“Despite the pronounced adverse repercussions of the COVID-19 pandemic in 2020 and 2021 on the alcohol sector, characterized by regulatory impositions leading to bar closures and sales disruptions, no layoffs were implemented, nor were there reductions in employee remunerations.”

“As a matter of fact, EABL has not downsized as alleged, and it is on a substantial growth trajectory, a trend reflected in the augmentation of the company's total asset value from KES 14 billion in 2000 to KES 110 billion in 2022,” Karuku submitted before the Kajiado Senator Lenku Seki-led Committee.

She further dismissed as false the allegation that the acquisition of EABL by Diageo is a consolidation of the alleged transfer to and eventual takeover by Heineken or Castel Group, adding that despite the purchase, EABL still remains a Kenyan company.

“The purchase of shareholding in EABL by Diageo plc was the single largest foreign direct investment in Kenya in 2023 where a total sum of KShs 22.8 Bn was paid to the market. This was recognized by His Excellency President Dr. Ruto on 22 March 2023 as a show of confidence in the local Kenyan market by investors. This transaction was approved by the Capital Markets Authority (CMA),” said the EABL boss.

She added: “Contrary to the false and malicious assertions in the Petition, EABL did not cease to he a Kenyan company -instead it has transformed over the years into a strong local Kenyon multinational, employing thousands of Kenyans and East Africans.”

EABL now wants the allegations made in the petition which are part of an ongoing court battle immediately removed from the Parliament website to “protect the integrity, reputation and confidentiality of EABL.”

In a letter to the Senate Clerk Jeremiah Nyegenye, EABL also wants the petition before the Senate dismissed for lack of jurisdiction.

“We respectfully request that you exercise your powers under Standing Order No. 1 and rule that the Senate has no jurisdiction to hear and determine the Petition as the matters raised are before competent authorities that have jurisdiction to hear and determine them. These include the courts and the CMA,” reads the letter.