Tanzanian authorities are considering kicking East African Breweries Ltd out of its market due to poor performance of a local brewer that it acquired five years ago.
The Fair Competition Commission (FCC) of Tanzania has given notice of intention to withdraw approval of EABL’s acquisition of Serengeti for Ksh4.9 billion in 2010, the Business Daily reports, citing breach of takeover conditions.
The regional brewing giant, could be forced to sell part of or its entire 51% shareholding in Serengeti Breweries as part of regulatory action by Tanzania’s competition watchdog.
The regulator said in a press notice that EABL had agreed to ensure that Serengeti grows faster under its control than prior to the transaction but had failed to meet expectations.
“The commission has issued a notice of intention to revoke its own decision with respect to the merger against EABL,” Bloomberg quotes the regulator as saying.
FCC did not specify the actions it would take but Tanzania’s Fair Competition Act gives it power to force an offending acquirer to dispose of some or all of its shares within a timeframe set by the regulator.
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The beer maker said it is in talks with Tanzanian authorities regarding the notice.
“EABL wishes to inform the public, its shareholders, customers and all other stakeholders of SBL, that EABL vigorously disputes the intended revocation and awaits a date for the formal hearing with the FCC,” said the EABL Group Corporate Relations Director Julie Adell-Owino.
FCC can also declare the acquisition void, ordering the transaction to be reversed with the acquirer getting all or part of its cash investment from the investors who had sold the shares.
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