Distell to acquire stake in Kenya Wine Agencies - CNBC Africa

Distell to acquire stake in Kenya Wine Agencies

East Africa

by Elayne Wangalwa 0

Distell Group is set to acquire 26 per cent stake in KWA Holding East Africa Limited. PHOTO: Getty Images

On Friday, Kenya’s Privatisation Commission concluded negotiations with Distell for the sale of 24,960,000 million Class A ordinary shares of five shillings each that was held by Industrial and Commercial Development Corporation (ICDC), a government-owned development finance and investment company for 860 million Kenyan shillings.

According to Richard Rushton, CEO at [DATA DST:Distell Group Limited], the acquisition strengthens Distell’s relationship with KHEAL by taking a partnership which began in 1998 to a whole new level.

“We are thrilled with our latest investment which comes at a time when the economic prospects across East Africa are highly promising. East Africa Common Market’s combined are a population of more than 150 million and an economy boosted by recent energy discoveries, present exciting opportunities,” said Rushton. 

KHEAL has been producing, bottling and distributing several Distell spirits brands like Viceroy Brandy, Clubman Punch, Castle Brand Aperitif. It also distributes Amarula, Drostdy-Hof and Cellar Cask, amongst others. 

(READ MORE: Kenya's thirst for more whiskey)

A government owned entity and a dominant spirits player in Kenya, KHEAL operates five distribution centres in the country, another in Uganda, and a wholly-owned subsidiary in Rwanda. The company also sells products through duty-free outlets in Kenya and Rwanda. 

Distell is looking forward to working closely with all stakeholders in the enterprise in order to expand local skills and build on the brand platforms that are already established in the East African country as it goes ahead with growing the potential of the business.

Other terms agreed upon are, an undetermined long term supply and distribution agreement with a minimum lock in period of five years between Distell and Kenya Wine Agencies Limited (KWAL), a subsidiary of KHEAL. Also, an unlimited long term production and bottling agreement between the two with minimum lock in period of five years and exclusivity for selected Distell Limited products being distributed by KWAL.

The agreement now reduces the Kenyan government stake from 73.56 per cent to 47.56 per cent.

KHEAL's own Kenyan brands include Kingfisher, Kibao, Caprice and Yatta.

In line with its strategic direct investment in the continent, Distell, Arica’s leading producer in wines, spirits, ciders and ready-to-drinks last month unveiled a bottling plant in Ghana. The company is also seeking to expand to Nigeria and Angola by 2015.