KENYA – British multinational alcoholic beverage company, Diageo, through its local unit Diageo Kenya, has had an oversubscription in the first phase of purchasing additional shares in East African Breweries Plc (EABL) from the brewer’s shareholders.
Diageo said EABL shareholders offered it 122.018 million shares in the initial phase, which closed on February 24, which is higher than the total 118.394 million units the company is looking to buy in two steps.
Diageo Kenya Limited received regulatory approval to increase its stake in EABL by 14.97% to reach 65%. The unit holds a 50.03 percent stake, representing 395.6 million shares.
Announcing the results of the first closing of the tender offer, Diageo Kenya said shareholders took advantage of the premium price offered to get value for their money.
“The total number of ordinary shares tendered by early acceptance shareholders was oversubscribed by 3.4 percent. We have designated 47.5 million shares for a guaranteed allocation of up to 10,000 shares for all offers it receives, with preference given to early bidders,” Diageo said in a statement.
The shareholders are selling their shares to the multinational at the Nairobi Securities Exchange (NSE) for Sh192 per unit, Sh17 more than the current price ranging between Sh174 and 175.
Those selling their shares are eligible for EABL’s interim dividend of Sh3.75 per share for the half year ended December.
The move by the firm to prioritize early bidders is meant to encourage uptake of the offer and reward existing shareholders who now stand a chance to make a significant capital gain on their stock.
In the second phase, which runs is currently underway to March 17, an additional 55 million shares will be prorated to bidders who missed out on their full allocation in the first phase, with the balance used to cover the remaining bids.
The purchase of additional shares, according to Diageo, is largely driven by the brewer’s improved returns to investors and growing market share in the country.
The brewer doubled its net earnings to Sh15.57 billion for the year ended June 2022 from Sh6.96 billion a year earlier. Its return on equity —a ratio that gauges how efficiently a company generates profits— jumped to 58.9 percent from 46.9 percent.
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