E-Malt.com News article: Tanzania: East African Breweries launches placement of 20% stake in SABMiller’s Tanzanian unit

East African Breweries Ltd (EABL) on November, 4 launched a 121.51 billion shillings ($69.1 million) placement of its 20 percent stake in SABMiller's Tanzanian unit at a premium to its last traded share price.

Orbit Securities, lead adviser and sponsoring broker for the share sale, said EABL's offer was 12.4 percent higher than the most recent closing price of Tanzania Breweries Ltd's shares on the Dar es Salaam Stock Exchange.

Subscriptions to the placement of 58,985,693 shares in Tanzania Breweries (TBL) run from Nov. 4 to 25 at 2,060 shillings apiece.

"According to assessments made by international valuation houses, the TBL shares offered for sale are highly undervalued," Orbit Chief Executive Laurean Malauri said.

"We expect a good subscription ... Many investors have shown a high appetite for the shares. Tanzanians will be given first priority to buy the shares, followed by citizens of East African Community member states and then foreigners."

Orbit Securities said the placement would end a distribution and brewing agreement between the two rival beer makers.

"The offer price ... represents a premium of 12.4 percent on the average closing price per share of 1,833 shillings for the three months ended 23 September 2011," Orbit Securities said in a letter to investors.

SABMiller owns 52.83 percent of TBL, while 6.04 percent of the shares in the company are listed on the Tanzanian bourse.

Tanzanian pension funds own 8.83 percent of TBL, while other shareholders are Unit Trust of Tanzania (4.49 percent), the Tanzanian government (4 percent) and International Finance Corporation (3.81 percent).

TBL, which controls about 70 percent of the beer market in Tanzania, was listed on the DSE in 1998 at an offer price of 550 shillings per share.

Serengeti Breweries - majority owned by EABL - and imported beer brands share the remaining market for alcoholic beverages in east Africa's second-biggest economy.

Strong economic and population growth in Tanzania are expected to continue driving the country's thirst for beer in the coming years, according to TBL's prospectus seen by Reuters.

Tanzania's economy grew at 6.7 percent in the second quarter of 2011, with the government targeting average economic growth of 8-10 percent annually over the next five years.

The country's population, projected at 43 million last year, is expected to grow to 63.6 million people by 2025, according to the planning commission.

TBL's revenues have registered strong double-digit growth since 2007, reaching 635.863 billion shillings in 2011, a 20 percent growth from last year, according to TBL's prospectus.

The gross profit margin has maintained a growth rate of more than 45 percent for the past five years, while net profit surged 90.4 percent from 2007 to 2011.

The beer maker, which has four breweries, has seen its assets growing by 167.7 percent over the past five years, while its net debt stands at 27 billion shillings.

The company expects its revenue to rise to 712.491 billion shillings in 2012, a 10 percent increase from this year. Operating profit is forecast to jump 7.5 percent in 2012 compared to this year.

TBL said foreign exchange fluctuations posed a risk to future revenue and profit because of the need to import raw materials and pay for capital equipment and services.


04 November, 2011