BGI brewing 2.5 bln birr Raya takeover

BGI Ethiopia has offered 2.5 billion birr to fully acquire Raya Brewery, a brewery established five years ago, in which BGI is the majority shareholder.

According to reliable sources close to the subject, BGI, which currently has 42 percent stake in the brewery, has offered to buy the remaining 58 percent of the company and the proposal is under review by the board of Raya. The board members and BGI International’s officials are negotiating on the proposal in Paris, France.

The move by BGI to buy the remaining 58 percent of the company’s shares proposed to offer seven folds of the initial share values to every shareholder of the company. This translates to seven thousand birr for a single share with a par value of one thousand birr.

Although the progress of the negotiations in Paris is not yet known, it is expected that the idea will be presented at the upcoming shareholders’ general assembly of Raya Brewery. Even though the stance of other shareholders on this proposal is not known, the second largest shareholder in the brewery, Dawit Gebregziabher, might have agreed to the proposal, according to the same sources. Dawit holds 25 percent shares in Raya Brewery.

The proposal offers that, if the other shareholders do not want to sell their shares, they can continue holding their respective shares in the company. The proposal that BGI presented will require it to pay more than 2.5 billion birr to the shareholders.

It is to be remembered that BGI had initially offered to buy more shares in addition to the 42 percent that it currently owns. The reason for that was to prevent the limitation that this will pose on indigenous people to hold shares.

Raya Brewery was established in Maichew, Tigray Regional State, and currently has the capacity to produce 700 hectoliters of beer annually. It was announced on the inauguration of the factory that the construction took 1.7 billion birr. The company’s asset currently stands at 4.45 billion birr.

Raya brewery was initially incepted by 58 individuals including Tsadkan Gebretensay (Gen.) with a capital of two million birr. Then its capital was raised to 250 million birr by increasing the number of shareholders to more than 2,440.

The capital of the company was then raised to 600 million birr and after the shareholders paid their shares completely, the company acquired a loan of 914 million birr from the Commercial Bank of Ethiopia. If BGI succeeds in acquiring the shares, all of the credits will be transferred to BGI.

BGI is the bottler of St. George beer and other beers in Ethiopia and it claims to have the largest market share in the country.

Although The Reporter tried to get comments from the officials of both companies regarding the reason behind the negotiations, the efforts had been fruitless.