Overview:
Back in September 2024, EABL launched a high-stakes tender offer aiming to acquire the remaining 1.81 percent stake in UBL that it didn’t already own.
In a rare show of confidence and defiance, minority shareholders of Uganda Breweries Limited (UBL) have thwarted a multi-billion-shilling attempt by East African Breweries Limited (EABL) to take full ownership of the Ugandan brewer.
Back in September 2024, EABL launched a high-stakes tender offer aiming to acquire the remaining 1.81 percent stake in UBL that it didn’t already own. With a sweetened cash offer of Shs5,630 per share—well above the implied valuation—the Nairobi-listed brewer was confident of mopping up the remaining 2.18 million shares. But last week, that plan fell flat.
Only 151,156 shares were tendered in the offer—just 7.9 percent of the target. After regulatory filtering, only 78,268 shares were accepted, pushing EABL’s stake from 98.19 percent to a modest 98.32 percent.
So why did investors walk away from what seemed like a great deal?
Industry analysts say this wasn’t about price—it was about principle, performance, and promise.
“UBL isn’t just another unlisted company. It’s a cash-generating powerhouse,” said David Bateme, a research analyst at Crested Capital. “No rational investor walks away from a business like that—especially one that’s still growing.”
Indeed, UBL’s financial muscle has been on display. From a diversified portfolio of popular beer and spirit brands to strong regional distribution and steady dividends, the company has built investor loyalty over time.
Post-Covid shifts in consumer preferences have further boosted UBL’s appeal. Spirits, in particular, are on the rise. From local favourites like Uganda Waragi and Bond 7 to global brands like Johnnie Walker and Smirnoff, the Ugandan brewer has positioned itself to cater to evolving tastes—especially among the youth and premium drinkers.
Simon Mwebaze, managing director at Cornerstone Asset Managers, said investors are increasingly looking at future value rather than immediate payouts.
“The diversification of UBL’s product line and the growing demand for spirits have created a long-term value proposition,” he said. “Shareholders weren’t just valuing their shares—they were valuing future growth.”
EABL’s offer, meanwhile, was built on a valuation by accounting firm Mazars BRJ, which placed UBL’s worth at Shs670.4 billion using EBITDA and discounted cash flow models. But without a public listing, there was no real market-tested value—just assumptions and projections.
“Investors might have felt the valuation was conservative,” Mwebaze added. “When a company’s trajectory is upward, shareholders tend to hold out for more—not less.”
Interestingly, EABL’s move mirrored that of its own parent company, Diageo, which raised its stake in EABL from 50.03 percent to 65 percent in early 2023 via a similar buyout. But Uganda wasn’t as easy a target.
Analysts speculate that part of the motivation behind EABL’s move was to consolidate control after the death of longtime UBL chairman Martin Aliker, who may have held a significant stake.
Still, the numbers didn’t add up—at least not for the minority shareholders. Even with Shs12.3 billion on the table, the shareholders resisted the urge to cash out. And given UBL’s contribution of 21 percent to EABL’s overall revenue—second only to Kenya—they likely saw themselves as sitting on a golden goose.
Meanwhile, EABL’s broader financial performance offered mixed signals. While profits dipped in the second half of 2023, they stabilized by the end of the year. The group posted Shs304.2 billion in annual profit and offered a generous dividend payout of Shs195.3 per share—a 68 percent payout ratio, up from the previous year.
Rising production costs, tax changes, and foreign exchange losses have challenged the group, but Uganda remains a bright spot in its portfolio.
With only four subsidiaries where it doesn’t own 100 percent, EABL hoped to simplify its structure and “streamline operations” through the tender offer. But for now, it will have to settle for less than total control.
For the minority shareholders who held out, the message is clear: some stakes are worth more than their price tag. And for EABL, the lesson might be that in Uganda, loyalty—and a profitable future—can be hard to buy.