- LIVE TV
French food group Danone said Friday it was buying a 40 per cent stake in Brookside, East Africa’s top dairy producer, as part of plans to expand in new markets.
The Paris-listed company is seeking new opportunities amid weak growth in Europe and a slowing economy in China.
Dubai equity firm Abraaj Group, which is a long-time investor in Brookside, keeps its 10 per cent stake in Brookside, while the Kenyatta family, which before the deal owned a 90 per cent stake, will retain the rest of the capital.
Abraaj’s Africa Fund invested $18.7 million (Sh1.6 billion) in Brookside in 2009.
The deal, whose financial terms were not disclosed, was sealed with the Kenyatta family which controls the group, and will boost Danone’s earnings, Emmanuel Marchant, vice-president for corporate development, told Reuters by phone. A Brookside spokesperson who spoke to BDAfrica.com confirmed the deal and said a press statement would be released soon. The Kenyattas are the descendants of Kenya’s first president. Brookside Executive Chairman Muhoho Kenyatta is the younger brother of President Uhuru Kenyatta.
Founded in 1993 in Kenya, Brookside, which also exports to Uganda and Tanzania, has a portfolio spanning from fresh to powdered milk, yoghurt and butter. The firm has itself been on an expansion drive in recent years, taking over market rivals such as SpinKnit Dairy, Buzeki Dairy, Ilara and Delamere.
In January, Brookside announced a deal that would see it control operations of Limuru Dairy for the next ten years. The firm has also been eyeing the Nigerian market where it plans to set up a milk processing plant next year.
Africa has in recent years become a major area of expansion for Danone and other global consumer companies such as Unilever, Nestle, Pernod Ricard and Diageo, attracted by the spending power of the growing middle class.
“Africa is an important new frontier for Danone for years to come … We can grow organically but also through acquisitions … We continue to look for nice opportunities,” Marchant said.
Over the past two years, Danone, which generates 60 per cent of its turnover in emerging countries, has invested more than a billion euros ($1.35 billion) in Africa. Last year the owner of yoghurt brands such as Activia and Actimel bought a 49 per cent stake in Fan Milk International, a frozen dairy products and juices maker in west Africa, with sales of 120 million euros (about KShs14 billion). Danone also paid 550 million euros (KShs65 billion) to take control of Morocco’s top dairy firm, Centrale Laitiere.
Reports first published in the African Report news magazine in January this year said that the Paris-listed Danone was looking to buy out the minority stake in Brookside held by the Abraaj Group.
The deal with Brookside gives Danone access to the largest milk collection and distribution networks in East Africa with over 140,000 farmers and more than 200,000 outlets. Last year, Brookside had 2013 sales of around $176 million (KShs15 billion). It controls more than 40 per cent of the Kenyan dairy market.
– Business Daily