EABL says to buy SABMiller stake in Kenyan brewer

NAIROBI (Reuters) - East African Breweries Ltd (EABL.NR) has agreed to buy a 20 percent stake in its Kenyan unit from SABMiller's (SAB.L) Africa unit for 19.53 billion shillings ($225 million), EABL said on Monday.

As part of wider deal to undo their reciprocal marketing ties EABL is to also sell its own 20 percent stake in neighboring Tanzania Breweries Ltd TBL.TZ through a public offer.

Controlled by Britain's Diageo (DGE.L), EABL announced in 2009 its intention of ending a brewing and distribution deal with SABMiller through Tanzania Breweries.

"EABL ... has agreed to purchase all of SABMiller Africa BV's 20 percent shareholding in Kenya Breweries Limited (KBL) for cash consideration of the US dollar equivalent of 19,528,062,600 Kenyan shillings, subject to disposal of its 20 percent shareholding in Tanzania Breweries Limited by way of public offer," EABL said in a statement published in newspapers.

"KBL has also agreed to terminate a brewing and distribution agreement with SABMiller International BV and will cease to distribute SABMiller's brands in Kenya after a short transitional period," it said.

EABL and SABMiller entered a deal some 10 years ago that allowed SABMiller to sell EABL brands through Tanzania Breweries Ltd TBL.TZ in Tanzania, with EABL reciprocating and brewing and marketing SABMiller products such as Castle Lager in Kenya.

In late 2010, EABL acquired a 51 percent stake in another Tanzanian brewer, Serengeti Breweries Ltd at a cost of $60.4 million.

The brewer says the KBL plant has a total brewing capacity of 2,500,000 hectoliters per year.

EABL added that it was still working on a sale process for its 20 percent stake in TBL.

"Pending further announcements regarding these matters, shareholders of EABL and other investors are advised to exercise caution when dealing with EABL's ordinary shares," it said.

Its shares are listed on the Nairobi Stock Exchange, Dar es Salaam Stock Exchange and Uganda Securities Exchange.

($1=86.80 Kenyan shillings)

(Reporting by George Obulutsa; Editing by Greg Mahlich)