Brewery is only one part of PPESA’s larger attempt to privatise state held enterprises
Heineken’s offer of 85.2 million dollars for the acquisition of Bedele Brewery exceeded those of three other breweries, while it was the only bidder for Harar Brewery.
The technical proposals and financial offers of bidders for the acquisition of these breweries along with six other state owned companies offered for sale in the same tender are being evaluated by the board of the Privatisation and Public Enterprises Supervising Agency (PPESA).
The bids for the tender, which was floated on January 26, 2011, was opened on March 19.
Bedele Brewery, located 500km west of the capital, in Oromia Regional State, was first opened in 1993. With an annual production capacity of 75 million bottles, it exports beer with a 4.2pc alcohol content to the United States (US).
Aside from the offer from Heineken, Bedele received offers from Carlsberg Brewery (68 million dollars), BGI Ethiopia (64 million dollars), and South West – SABMiller (70 million dollars).
Harar Brewery, located in Harar 526km east of Addis Abeba, was established in 1993. Its annual production capacity of 67 million bottles makes it the second largest producer of beer in Ethiopia, after Bedele. Heineken offered 78.1 million dollars for its acquisition.
The Amstel-Heineken brand is one of the largest in the world. It brews and sells more than 200 international, regional, local, and specialty beers and ciders. This includes Primus, Birra Moretti, Sasres, Cruzcamp, Foster’s, Strongbow, Bulmer, Newcastle Brown Ale, Zywiec, Ochota, Kingfisher, Tiger, Dos Equis, Star, Tecate, and Sol.
Heineken NV was formed in 1952 and bears the founder’s family name, Heineken. In 2010, the company achieved a net profit growth of 19.7pc, and it has 140 breweries in more than 70 countries.
The PPESA, which has received 1.5 billion Br from transferring 287 companies and 16 companies through lease and joint venture (JV) agreements, respectively, to the private sector during its 15-year existence, initially planned to sell the three state owned breweries, including Meta Abo Brewery, in the next three years, according to the agency’s five-year plan.
However, due to the high demand from the private sector, the agency pushed the sale forward. The results for the tender floated on the sale of Meta Abo are yet to be announced.
PPESA’s process to privatise the breweries is only part of a larger mass privatisation effort. In January, Awash Winery, Awasa and Tigray flour factories, Kokeb Flour & Pasta Factory, as well as Gibe I Agricultural Development Enterprise were put up for sale for the first time by the agency, which has facilitated the privatisation of 73 companies and their branches over the past five years.
Kokeb Flour & Pasta Factory received six offers. ATL Trading Plc offered 55.3 million Br, Muler Industrial Plc offered 43.2 million Br, Centre General Trading Plc offered 41 million Br, Tamira Plc offered 35.7 million Br, and Al-Buruj General Trading offered 35 million Br. Tekelye Yezengaw, an individual bidder, offered 37.4 million Br.
Tigray Flour Factory received an offer of 11.5 million Br from Green Coffee Plc, and one of 12.5 million Br from Muler Industrial. Awasa Flour Factory attracted one bidder, ATL Trading, which offered 49.2 million Br.
Tabor Ceramic Products was up for sale for the third time. It did not receive an offer when the tender for its acquisition was first floated. However, it was awarded to Amaga Plc for 60.2 million Br during the second time, but the bid winner failed to pay the required 35pc of the total offer as a down payment to the agency and it was not transferred.
In the latest tender, it failed to receive an offer, alongside Awash Winery and Gibe I Agricultural.
The sale of the companies requires simultaneous submission of the technical proposals and financial offers, which are evaluated by the PPESA board. Upon winning and paying the deposit, bid winners have five years to pay the outstanding amount.
However, one of the basic requirements of the bid is for the bidder to possess the financial capacity to administer and enhance the company’s potential.
For this reason, it is likely that all the highest bidders will be awarded the companies, a consultant, who had prepared the financial proposals for some of the bidders that participated in past tenders issued by the PPESA, told Fortune on condition of anonymity due to non-disclosure agreements with clients.
The bid winners are also required to retain the employees of the privatised companies. To date, a total of 32,500 employees have been transferred along with the former state owned enterprises.