The world's largest alcohol company Diageo and South African Breweries have announced that their subsidiaries East African Breweries Limited (EABL) and South African Breweries International (SABI) respectively have entered into agreements relating to the operation of their businesses in Kenya and Tanzania.
 
In Kenya, SABI has closed its brewing operations at Thika. SABI will, however, retain its presence in Kenya by taking a 20% shareholding in Kenya Breweries Ltd, a subsidiary of EABL. As part of the transaction, EABL will acquire Castle Brewing Kenya Limited (CBK), a subsidiary of SABI. Brands previously produced and sold by CBK will be produced and sold under licence by EABL. Diageo owns 50.03% of EABL.

In Tanzania, EABL has closed its Kibo Brewing operation. EABL will retain its presence in Tanzania by taking a 20% holding in SABI's Tanzania Breweries Ltd. EABL will retain its presence in Tanzania by taking a 20% shareholding in SABI's Tanzania Breweries Limited (TBL). At the same time, TBL will acquire Kibo Breweries Limited (Kibo), a subsidiary of EABL. Brands previously produced and sold by Kibo will be produced and sold under licence by TBL.

The agreements are subject to certain conditions precedent including the approval of the local regulatory authorities. No payment or compensation will be made between the two companies. Each company is responsible for the closure arrangements of their own breweries.

Net assets acquired by EABL in this transaction had a value of approximately US $21.2m as at 30 September 2001 and the net assets acquired by SABI had a value of approximately US $24.5m as at 30 June 2001.