French Food Giant Targets Minority Stake in Brookside

Paris-listed Danone is looking to buy out the minority stake in Brookside held by Dubai-based investment company, the Abraaj Group.

 Brookside controls 44 per cent of the processed milk market in Kenya, ahead of New KCC which commands 20.8 per cent. FILE

Brookside controls 44 per cent of the processed milk market in Kenya, ahead of New KCC which commands 20.8 per cent. FILE

French food giant Danone is said to be eyeing a stake in Brookside Dairy, in a transaction that could see the exit of the minority shareholder in Kenya’s biggest milk processor.

Reports first published in the African Report news magazine said that the Paris-listed Danone is looking to buy out the minority stake in Brookside held by Dubai-based investment company, the Abraaj Group.

The magazine reported that the stake held by Abraaj is up for sale and has also attracted the attention of another unspecified international firm.

Contacted by the Business Daily, Brookside Dairy neither confirmed nor denied news of the deal, but declined to comment on the matter.

“At this point we have no comment on the issue,” said Brookside general manager John Gethi.

The Abraaj Group, in response to queries on the potential sale of their stake also said that they would not comment, terming the reports as “market rumours”. Danone did not respond to requests for comment from the Business Daily by the time we went to press.

Brookside, which is majority owned by the Kenyatta’s family, has itself been on an expansion drive of late, taking over market rivals such as SpinKnit Dairy, Buzeki Dairy, Ilara and Delamere.

Earlier this month Brookside announced a deal that would see it control operations of Limuru Dairy for the next 10 years.

Brookside is Kenya’s biggest dairy firm processing more than 500,000 litres of milk per day, with an installed capacity to process one million litres daily. The firm controls 44 per cent of the processed milk market in Kenya, ahead of New KCC which commands 20.8 per cent, and Fresha with 17 per cent.

Brookside has also indicated it plans to cast its expansion net beyond the Kenyan borders, announcing last September plans to acquire a 20 per cent stake in Ethiopia’s Elemtu Dairy.

The firm is also eyeing the Nigerian market where it plans to set up a milk processing plant next year.

The Abraaj Group’s Africa Fund invested $18.7 million (Sh1.6 billion) in Brookside in 2009.

Other firms in which the Dubai -based investment company has invested in Kenya since 2006 include Bank of Africa, Athi River Mining, East African Cables, Deacons Kenya, Nairobi Women’s Hospital and UAP.

The company in June last year partnered with Danone to acquire West African dairy firm Fan Milk, with Danone taking a 49 per cent stake and Abraaj the remainder.
The acquisition came as the French firm said it would focus on growing its African presence in the next decade.

The company has presence in 35 African countries, primarily in North Africa, South Africa and French speaking countries, where it deals in baby food and fresh dairy brands.

– Business Daily