• Majority of shareholders back takeover
  • Deal nears completion
  • Diageo seeks to overhaul SABMiller
East African Breweries Ltd closes in on Serengeti Breweries

East African Breweries Ltd closes in on Serengeti Breweries

East African Breweries Ltd is close to taking control of Serengeti Breweries in Tanzania, after shareholders in the Diageo subsidiary backed the deal.

Diageo confirmed today (22 October) that a majority of shareholders in East African Breweries (EABL) have voted in favour of the Serengeti Breweries deal. Diageo owns 50.03% of EABL.

Shareholder backing brings EABL close to acquiring control of Serengeti Breweries, which is Tanzania's second largest brewer behind SABMiller-controlled Tanzania Breweries.

"EABL is now free to proceed towards completion of the acquisition and the last few remaining conditions to completion are expected to be either satisfied or waived by EABL in the near future," said Diageo. "A further announcement confirming completion will be issued in due course," the Guinness brewer added.

The drinks giant has not specified the size of EABL's prospective controlling stake in Serengeti, although local reports have said it will be 51%. Financial details have not been disclosed.

EABL has already secured regulatory clearance for the deal from Tanzania's competition body and has agreed to dispose of its 20% stake in Tanzania Breweries.

Diageo plans to use Serengeti to provide stiffer competition to SABMiller in Tanzania and increase its presence in the promising African beer market.

Diageo said last year that Serengeti had gross assets worth around GBP38m (US$59.7m). It added that the brewer had a 17% share of the Tanzanian beer market by volume in 2009, up by 10% on its share in 2006.

Last week, SABMiller said that its lager volume sales in Tanzania for the six months to the end of September were flat against the same period of last year, although it reported gains in the premium category.