The Board of Directors of East African Breweries PLC (EABL) has today announced that Diageo PLC has agreed to sell its majority stake in EABL and its shareholding in the Kenyan spirits business, UDV (Kenya) Limited to Asahi Group Holdings (Asahi).
This acquisition of EABL represents the first time a Japanese brewing major has made an investment of this magnitude in an African alcohol beverage business.
Under the terms of the transaction, Asahi will become majority owners of one of East Africa’s leading businesses, assuming control of all operations in Kenya, Uganda and Tanzania. Asahi will preserve beloved local brands while introducing globally recognized names from its portfolio to consumers in East Africa.
The estimated net proceeds of this transaction after tax and transaction costs will be $2.3 billion equating to a multiple of 17x adjusted EBITDA, resulting in an implied enterprise value for 100% of EABL of $4.8 billion.
The transaction represents a strong sign of confidence in the long-term growth prospects for EABL and the East African region, underpinned by robust demographic and economic prospects and will see an esteemed, listed business continue to flourish under its new owner.
EABL looks forward to a new chapter of growth with Asahi in the dynamic, rapidly evolving beverage markets within East Africa building on our strong legacy. The Asahi business will benefit from EABL’s state-of-the-art production facilities, a seasoned Board and management team with extensive experience, strong brand portfolio, robust route-to-consumer and great relationships with employees, local partners and customers.
Jane Karuku, MD & CEO EABL added “This acquisition marks a significant step in accelerating our growth ambition of becoming the most celebrated beverage business in Africa. The new majority owner brings significant knowledge and expertise in innovation and growing successful brands globally that will help us achieve that ambition.”
Nik Jhangiani Interim Chief Executive Officer of Diageo said: “We are incredibly proud of the achievements of EABL and our colleagues across Kenya, Uganda and Tanzania. EABL and Diageo have built the largest beer business in East Africa, a testament to driven people with a passion for the consumers and communities they serve. We are excited to partner with Asahi through the licensing of Diageo brands in the region going forward.
This transaction both delivers significant value for Diageo shareholders and accelerates our commitment to strengthen our balance sheet, returning the Group to well within our target leverage ratio range of 2.5 – 3.0x through disposals of non-strategic, non-core assets, alongside delivering positive operating leverage, and tighter capital discipline. This disposal, alongside the recent announcement by USL to conduct a strategic review of its ownership of RCB, represent material steps in delivering on this commitment.”
Atsushi Katsuki, President and Group Chief Executive Officer, Director and Representative Executive Officer of Asahi added: “This business is a high-quality, leading company in Kenya, Uganda, and Tanzania, with an unrivalled brand portfolio and marketing capabilities, state-of-the-art production facilities and strong market shares. Together with its excellent management team and employees, we will pursue sustainable growth and medium- to long-term enhancement of corporate value, while contributing to the development of the local economies.”
In the interim, Diageo will continue to support Asahi to ensure a smooth transition and successful transfer of operations.
