Diageo seeking to aggregate its share holding in East Africa Breweries Limited through intra-group share transfer

KENYA – Diageo plc, multinational alcoholic beverages company, holding 50.03% stake in East African Breweries Limited (EABL) through three of its wholly owned subsidiaries i.e. Diageo Kenya Limited, Guinness Overseas Limited and Diageo Holdings Netherlands B.V is seeking to transfer all its EABL shares to Diageo Kenya.

According to a statement by EABL, Diageo plc holds 395,608,434 ordinary shares of the company with Diageo Kenya Limited having 338,618,340 shares (42.82%); Guinness Overseas Limited holding 20,628,804 shares (2.61%) and Diageo Holdings Netherlands B.V. securing 36,361,290 shares (4.6%).

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The move is part of a wider internal group-reorganization, which aims to further streamline and optimize Diageo plc’s group corporate structure.

This including minimizing the chain of entities and number of geographies through which it holds shares in its direct and indirect subsidiary companies.

The proposed transaction would simplify Diageo plc’s indirect holding structure of EABL shares by consolidating those EABL shareholdings into a single indirectly wholly-owned Kenyan subsidiary company, Diageo Kenya Limited.

Since Guinness Overseas Limited, Diageo Holdings Netherlands B.V. and Diageo Kenya Limited are all indirect wholly-owned subsidiaries of Diageo plc, the proposed transaction will have no impact on the current ultimate beneficial ownership of these transferring shareholdings, which will remain with Diageo plc.

Consequently, Diageo plc will remain the ultimate beneficial owner of the entire 50.03% stake in EABL, and, hence, EABL’s ultimate parent company both before and after the proposed transaction.

The proposed transaction is said to have no impact on any other shareholder in EABL as Diageo Kenya Limited is not required under the Capital Markets (Take-overs & Mergers) Regulations, 2002 or any other law or regulation to make a take-over offer for the shares of EABL that it does not already own or which it will acquire under the transaction.

Diageo Kenya Limited confirms that it will not be making a take-over offer for the remaining shares of EABL and Diageo plc confirms that it has no intention to do so as part of the proposed reorganization.

In addition, the proposed transaction will not have any impact on the management or board of EABL as constituted and is not expected to impact on the business, operations or finances of EABL.

Approval of the transaction has been granted by the Authority under the provisions of section 57(e) of the Capital Markets (Licensing Requirements) (General) Regulations, 2002 by way of a private transaction where there is no change in the ultimate beneficial ownership of the shares.

The transaction will be settled on an intra-group basis at the weighted average price per share of EABL for the 30 trading days preceding the date of signature of the transaction documents, as is customary for transactions in shares of listed companies outside the stock exchange.

Stanbic Bank Kenya Limited and SBG Securities Limited are the appointed financial advisers for the transaction. Coulson Harney LLP (Bowmans Kenya) are the legal advisers to Diageo plc.

It is anticipated that the transfer of EABL shares will be completed within two weeks since 24 July 2020.

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