East African Breweries Limited (EABL) has dismissed claims of engaging in any fraudulent activity in the recent sale of additional shareholding to Diageo, which owns a 65 percent majority stake in the company.
Speaking before the Senate Standing Committee on Tourism, Trade, and Industrialization on Thursday, EABL Managing Director Jane Karuku defended the sale, stating that it was legally and procedurally done in line with the Capital Markets Authority (CMA) regulations.
Diageo Kenya Limited increased its ownership of EABL from 50.03 percent to 65 percent earlier this year by purchasing an additional 15% of the company's shares through a public tender offer.
But Nicholas Rono submitted a petition to the Senate opposing the sale of shares, which was touted as the single greatest foreign direct investment in Kenya in 2023, for which a total of Kes 22.8 billion was paid to the market.
The brewer was accused of going on a rampage and selling off the company's assets while severely cutting back on its personnel, leading to allegations of a potentially hostile takeover of EABL.
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In response, Karuku termed the allegations as “false and malicious”, pointing out that the company has not engaged in any corporate downsizing activities within the past decade, including during the COVID-19 pandemic period.
“Despite the pronounced adverse repercussions of the COVID-19 pandemic in 2020 and 2021 on the alcohol sector, characterized by regulatory impositions leading to bar closures and sales disruptions, no layoffs were implemented, nor were there reductions in employee remunerations.”
“As a matter of fact, EABL has not downsized as alleged, and it is on a substantial growth trajectory, a trend reflected in the augmentation of the company's total asset value from KES 14 billion in 2000 to KES 110 billion in 2022,” Karuku submitted before the Kajiado Senator Joseph Ole Lenku-led Committee.
Further, she dismissed as false the allegation that the acquisition of EABL by Diageo is a consolidation of the alleged transfer to and eventual takeover by Heineken or Castel Group, adding that EABL remains a Kenyan company despite the purchase.
“The purchase of shareholding in EABL by Diageo plc was the single largest foreign direct investment in Kenya in 2023 where a total sum of KShs 22.8 Bn was paid to the market. This was recognized by His Excellency President Dr. Ruto on 22 March 2023 as a show of confidence in the local Kenyan market by investors. This transaction was approved by the Capital Markets Authority (CMA),” Karuku said.
To "protect the integrity, reputation, and confidentiality of EABL," EABL now requests that the allegations in the petition that are the subject of an ongoing legal dispute be immediately deleted from the Parliament website.
EABL further requests that the petition before the Senate be dismissed for lack of jurisdiction in a letter to Senate Clerk Jeremiah Nyegenye.
“We respectfully request that you exercise your powers under Standing Order No. 1 and rule that the Senate has no jurisdiction to hear and determine the Petition as the matters raised are before competent authorities that have jurisdiction to hear and determine them. These include the courts and the CMA,” reads the letter.
