Ethiopia: Heineken, Ernest&Young Bid for Bedele, Harar breweries in First Week

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The tender for the privatisation of Bedele and Harar breweries that was issued on January 26, 2011, attracted Heineken, a Netherlands based company, and Ernest & Young, the London based auditoras, along with four other bidders in the first week.

The two breweries are part of eight enterprises the Privatization and Public Enterprises Supervising Agency (PPESA) has put up for sale.

The bidders that have targeted both factories include Heineken, GGG Development, Valiant Plc, and Ernest & Young. Goh Capital Partner Plc submitted a proposal for Bedele while Kangaroo Plast Group Plc picked Harar Brewery.

These companies have submitted both technical and financial proposals. The tender remains open for bidders until March 28, 2011.

Bedele Brewery, located 500km west of Addis Abeba, in Oromia Regional State, was opened in 1993. It has an annual Heineken production capacity of 75 million bottles and counts the US as part of its market. It mostly uses local raw materials but imports yeast from Europe and, occasionally, malt from Germany.

Harar Brewery, located 526km east of Addis Abeba, was established in 1983. Its annual production capacity is 67 million bottles.

Heineken, based in the Netherlands with markets in 170 countries, signed a contract with Kangaroo Plast on January 22, 2010, to represent it in Ethiopia and handle 75pc of the distribution of Heineken beer.

The company has submitted its financial offer and technical proposal to acquire Meta Abo Brewery SC in a JV with the agency, along with five other bidders. The propsals are being reviewed.

Kangaroo Plast is under the Kangaroo Industrial Group comprising eight companies. It is constructing its own brewery with a capital of 200 million Br in Mojjo Town, located 73 km from Addis Abeba, in Oromia Regional State.

Valiant was established in Ethiopia, in 2003, by Fisseha Gebeyehu and Mesfin Mengesha with a capital of 200,000 Br. Ernest & Young, headquartered in London, is a professional service firm and one of the largest auditors with a presence in 140 countries.

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The PPESA has collected 1.5 billion Br over the past 15 years from the complete sale of 287 companies and from lease and joint venture (JV) agreements for 16 companies.

Along with the breweries, six other state owned companies have been put up for sale for the first time by the agency, which has facilitated the privatisation of 73 companies and branches over the past five years alone.

Out of the total companies, Awash Winery, Awasa and Tigray flour factories, Kokeb Flour & Pasta Factory, and Gibe I Agricultural Development Enterprises were offered for privatisation for the first time.

This is the third time for Tabor Ceramic Products to be floated for sale. It failed to attract any bidders the first time round. The second time it was awarded to Amaga Plc for 60.2 million Br, but the sale fell through because Amaga failed to make the down payment.

Winning bidders are expected to make 35pc down payment in all of the PPESA’s tenders, with the outstanding amount to be paid in five years. Winners are also required to initially retain the employees. To date, a total of 32,500 employees’ contracts have been sustained by the new owners.

Source: All Africa

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