UAE firm set to take over Limuru Tea in major deal

B Commodities ME (FZE), a firm incorporated in the United Arab Emirates (UAE), has announced its intention to acquire a 51.99 per cent stake in Limuru Tea company.

This acquisition is expected to result in B Commodities gaining indirect control and beneficial ownership of Limuru Tea, marking a major shift in the ownership structure of the company. A statement by Capital Markets Authority (CMA) yesterday indicated that upon completion of the transaction, B Commodities will indirectly gain control and own 51.99 per cent of Limuru Tea’s issued shares.

According to the market regulator on May 6, 2024, Ekaterra and B Commodities entered into a share purchase agreement for the sale of the share capital of various Ekaterra subsidiaries and/or affiliates in East Africa including 98.56 per cent of the total issued share capital of Lipton Kenya.

“The transaction will, upon completion, result in B Commodities indirectly acquiring effective control and beneficial shareholding of Limuru Tea equal to 51.99 per cent of the issued share capital of Limuru Tea, CMA said in a statement.

It said the transaction, which is anticipated to close in the third quarter of this year is subject to the receipt of anti-trust approvals from the Competition Authority of Kenya (CAK) and the Fair Competition Commission of Tanzania (FCCT).

The acquisition process was initiated with a share purchase agreement between B Commodities and Ekaterra Company, which holds the majority stake in Limuru Tea.  It will lead to B Commodities indirectly acquiring effective control and beneficial shareholding of Limuru Tea, a transaction that will significantly alter Limuru Tea’s governance and operational dynamics.

This development comes in the wake of Ekaterra’s decision to divest its tea business to CVC Capital Partners Fund VIII.  Ekaterra, a global leader in the tea business, boasts a diverse portfolio of 34 brands, including household names such as Lipton, PG tips, Pukka, T2, and TAZO.

Market focus

The sale of Ekaterra’s tea business signifies a strategic shift in the company’s business model and market focus.  The Ekaterra Tea Business globally cultivates, processes, and supplies leaf tea, and develops, manufactures, and sells specific tea and herbal products, including in Kenya.

The acquisition by B Commodities is part of a larger trend in the tea industry, which has been witnessing robust growth in recent years. In 2023, Kenya’s tea export earnings reached a record $1.22 billion (approximately Sh180.57 billion), representing a 31 per cent increase in the value of exports. This surge in export earnings underscores the growing global demand for tea and the pivotal role of Kenya in meeting this demand.

Browns Investments Plc, a Sri Lankan company listed on the Colombo Stock Exchange, indirectly owns B Commodities in its entirety. Browns has a diverse portfolio, with operations in industries such as leisure, renewable energy, agriculture, construction, and real estate, extending to the Maldives, Mauritius, and Sierra Leone.

It owns Maturata Plantation, previously owned by James Finlay (Kenya) Limited, making it the largest tea, cinnamon, and sugar plantation operator in Sri Lanka. In November 2023, Browns, through its subsidiary B Commodities, acquired 85 per cent ownership of James Finlay (Kenya) Limited..

“B Commodities wishes to acquire the Tea Business with a view to contributing to the continued growth of the Tea Business and further expanding Browns’s industry position in the tea cultivation and agro-processing sector,” the regulator’s statement further said.