Diageo has reportedly selected the Bank of America and Goldman Sachs to carry out a strategic review of East African Breweries (EABL).
The distilling major, which holds a majority stake in EABL is said to be looking to move to an asset-light operating model to generate more capital for boosting growth, people familiar with the matter told Bloomberg yesterday (28 July).
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Diageo, Bank of America and Goldman Sachs declined to comment on the story when approached by Just Drinks.
The sale may only feature EABL’s beer business, which would be valued at around $2bn, the unnamed sources told Bloomberg. EABL also sells Diageo spirits and non-alcoholic drinks.
Headquartered in Nairobi, Kenya, EABL’s business is made up of Kenya Breweries, Uganda Breweries, International Distillers Uganda Limited, Serengeti Breweries Limited, United Distillers Vintners (Kenya) and East African Maltings.
Diageo is EABL’s largest shareholder with a 65% stake.
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By GlobalDataOther breweries like Heineken, Castel Group and Anheuser-Busch InBev are said to be interested in acquiring part or all the East African business, according to Bloomberg.
Heineken declined to comment on the news. Castel Group and AB InBev did not respond to Just Drinks at the time of writing.
The reported news comes at a time when the Guinness stout owner is making significant changes to the business.
Earlier this month, Diageo revealed that CEO Debra Crew was stepping down “by mutual agreement” in July, having held the top position for two years.
CFO Nik Jhangiani stepped in “on an interim basis” as the company looks for a new chief executive.
The month prior, the group said it was looking to save $500m in costs over the next three years as part of efforts to become more “agile” and “resilient”.
Diageo has offloaded other assets in Africa this year. In January, it sold its stake in Guinness Ghana to Castel Group, and in April it offloaded its 54% share of Seychelles Breweries to Mauritius-based Phoenix Beverages for roughly $80m.
Speaking to Just Drinks in May, partner at UK-based consultancy Food Strategy Associates, Richard Wyborn said a sale of East African Breweries could be a potential option for Diageo as part of its cost savings plan.
At the time, he said: “I’d be surprised if EABL, their last remaining beer asset in Africa of scale, doesn’t get sold, along with Serengeti.”
