KENYA – Beer maker East African Breweries Limited’s (EABL) earnings this year are set to get a major boost following conclusion of the sale of its glass bottle manufacturing subsidiary.
The brewer Thursday announced that the sale of Central Glass Industries (CGI) to a South African glass-making firm was completed on September 30, a deal in which EABL expects to earn Sh4.5 billion.
EABL, which is 50.02 per cent owned by multinational brewer Diageo, sold the glass business to Consol Glass as part of a divestiture plan meant to help reduce its debt.
“Following receipt of all regulatory approvals and the satisfaction of all conditions precedent, EABL successfully concluded the sale of the entire issued share capital of CGI,” the brewer said in a statement.
“Therefore, with effect from October 1, while CGI will remain as a going concern, it will no longer be a subsidiary of EABL.”
This buyout includes an initial five-year contract that will see Consol supply EABL with glass bottles for its beer and spirits brands, a contract which the brewer expects will be extended.
In return, the beer maker will offer its business partner management services for a maximum of one year at a fee.
EABL’s full year net profits to June grew 40 per cent to Sh9.6 billion on the sale of 15 acres of land (out of 60 acres of idle land it owns in its Ruaraka headquarters) and cost-cutting measures.
This profit excluded the Sh40 million made by CGI. Profits from the CGI sale — a deal which was initially expected to be completed in July — are now set to boost the company’s bottom-line even more in the current financial year.