Ethiopian Government Says Heineken Will Acquire Two State-Owned Breweries

Heineken NV (HEIA), the world’s third-largest brewer, will buy two Ethiopian state-owned beer makers for 2.7 billion birr ($160 million), the Horn of Africa country’s privatization agency said.

Heineken, based in Amsterdam, will purchase Bedele Brewery SC for 1.4 billion birr and Harar Brewery SC for 1.3 billion birr, Wondafrash Assefa, spokesman for the Private and Public Enterprises Supervising Agency, said in a phone interview today from Addis Ababa, the Ethiopian capital.

“Heineken indicated in their bid document they will expand Harar and bring in new products,” he said.

Heineken can’t comment because it hasn’t received written confirmation from the agency that its bids were accepted, John- Paul Schuirink, a company spokesman, said in an e-mail today.

Beer consumption in Ethiopia, Africa’s second-most populous nation, is expected to grow by about 15 percent every year for the next five years, Access Capital, an Addis Ababa-based research group, said in a report last year. BGI Ethiopia, the country’s biggest brewer by sales, accounted for about half of the 300 million liters (79 million gallons) of beer sold in the 12 months to July 7, 2009.

Heineken bid more for Bedele than SouthWest Development Plc of Ethiopia; Carlsberg A/S, the Copenhagen-based beer maker; and BGI Ethiopia, a unit of French brewer and vintner Groupe Castel, Wondafrash said on March 29. There were no other offers for Harar, he said.

Profitability

The breweries were sold even after Bedele earned a profit of about 100 million birr last year and Harar posted net income of more than 50 million birr, according to Wondafrash.

“It’s not about the profitability,” he said. “It’s that the government should not run these factories because the private sector can run them more efficiently.”

Ethiopia is selling state-owned companies to private investors as it seeks to diversify its economy. The Horn of Africa nation, the continent’s biggest coffee producer, relies on agriculture to generate 43 percent of its economic output, according to the CIA World Factbook.

The government plans to sell 50 companies by mid-2015, including agricultural, food and printing businesses, according to Wondafrash.

Communist Nationalization

Most of Ethiopia’s private businesses were nationalized in the 1980s under the former Communist Derg regime. That government was toppled by the current ruling Ethiopian People’s Revolutionary Democratic Front, a party with Marxist roots that has shifted toward a market-based economy since it came to power in 1991. The EPRDF government has sold 214 public enterprises since 1995 for 3.14 billion birr, according to the agency’s website.

“The process has been gradually developing,” Wondafrash said. “We started with small enterprises, now we are transferring big ones.”

The board is assessing five bids for another state-owned beer maker, Meta Brewery, Wondafrash said, without providing further details.

Bedele, situated in western Ethiopia, has the capacity to produce 300,000 330-milliliter (0.7-pint) bottles of beer per day, according to the agency’s website. Harar Brewery, which is in the east of the country, can produce 200,000 hectoliters (5.28 million gallons) of the beverage annually, it said.

-Editors: Paul Richardson, Alastair Reed.

To contact the reporter on this story: William Davison in Addis Ababa via Nairobi at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.

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