Kenya: EABL stock price hits 52-week high on Diageo purchase plan

EABL share price soared to close at a 52-week high of Sh181.25 on February 13 on the back of plans by Diageo to purchase additional shares in the Nairobi Securities Exchange-listed firm.

The gains close the gap between EABL’s prevailing stock price and the Sh192 per share offer by its parent firm Diageo, which is seeking to buy an additional 118.4 million shares in a bid to raise its stake to 65 percent.

It represents a gain of 31.3 percent compared to the closing price of Sh138 on the last day of trading before Diageo disclosed its offer on October 14, 2022.

Diageo’s move to increase its stake in EABL after taking a controlling stake in the company from its Guinness subsidiary in 2000 is seen as a vote of confidence in the business, which reported flat profit in the six months to December as higher costs and taxation offset gains in sales for the period.

The offer to purchase shares, which gives priority to investors in the firm’s books by January 16, is expected to run in two phases, the first between February 6-24 and between February 27-March 17.

The move to prioritise early bidders in the offer is set to reward existing shareholders who will now have the opportunity to make significant capital gains from the disposal of their shares.

Diageo could spend up to Sh22.7 billion to acquire the additional stake.

The UK-based firm says it had designated 47.5 million shares for a guaranteed allocation of up to 10,000 shares for all offers it receives, with preference given to early bidders on its books by January 16.

Diageo added that those committing to sell their shares will remain eligible for EABL’s interim dividend of Sh3.75 per share for the half year ended December, so long as they are on the brewer’s books by the register closure date of February 16.

This is because the settlement and transfer of the sold shares will be done in April.

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