East African Breweries Limited (EABL) has concluded its tender offer to buy out minority shareholders in Uganda Breweries Limited (UBL), securing only a small fraction of its intended target. The Nairobi Securities Exchange-listed brewer managed to acquire just 151,156 shares out of the 2.18 million it had hoped to purchase—representing a mere 7.9 percent uptake.
EABL will pay a total of Sh30.17 million for the shares tendered in the offer, which was open from September 3, 2024. The brewer had priced each share at Ush5,360, equivalent to Sh199.57, setting the full offer’s potential value at Sh434.7 million at prevailing exchange rates.
Prior to the offer, EABL already owned a commanding 98.19 percent stake in UBL, translating to 118.29 million shares. Following the partial buyout, its ownership will inch up to 98.32 percent, or 118.44 million shares.
In a statement, the company said:“While the uptake was lower than anticipated, we respect the decisions of all shareholders who chose to retain their stake in Uganda Breweries. Our commitment to the Ugandan market remains unchanged,” said EABL Group Corporate Affairs Director Jane Karuku.
It added that the transfer of the remaining 72,888 shares is underway, with payments to be issued upon completion of the process.
EABL did not comment on the reasons behind the underwhelming participation. However, the company emphasized that the offer was conducted on a “willing buyer, willing seller” basis, assuring minority shareholders that there was no pressure to sell.
Notably, UBL is not publicly listed, meaning that shareholders lacked a real-time market price benchmark. Instead, EABL commissioned an independent valuation to set a fair offer price. The valuer’s assessment factored in current and projected earnings, market valuation of tangible and intangible assets, and growth prospects, rather than relying solely on book value.
UBL is one of four subsidiaries where EABL does not hold a full 100 percent stake. Others include Serengeti Breweries in Tanzania (92.5 percent), UDV Kenya (46 percent), and East African Beverages in South Sudan (99 percent).
EABL’s move mirrors that of its parent company, Diageo, which in March 2023 increased its stake in the brewer by acquiring an additional 14.97 percent through its subsidiary Diageo Kenya. That deal saw Diageo’s ownership rise from 50.03 percent to 65 percent, costing Sh22.7 billion at a price of Sh192 per share.
Despite the limited success of the UBL tender, the transaction reflects EABL’s ongoing strategy to consolidate ownership across its regional subsidiaries, potentially paving the way for greater operational control and streamlined decision-making in key markets.