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Tanzanian Antitrust Agency Threatens Diageo Unit Over Merger

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Tanzania’s Fair Competition Commission threatened to withdraw its approval of East African Breweries Ltd.’s 2010 merger with Serengeti Breweries Ltd., saying the beer maker had breached conditions of the deal.

Serengeti’s performance failed to meet expectations set out when the antitrust agency approved the deal, the FCC said in a statement published in the Dar es Salaam-based Guardian newspaper on Tuesday.

“The commission has issued a notice of an intention to revoke its own decision with respect to the merger against EABL,” it said. EABL, as the Nairobi-based brewer is known, said it disputed the FCC notice.

EABL is the region’s biggest brewer. Diageo Plc, the London-based maker of Guinness stout and Johnnie Walker whisky, owns 50.03 percent of the company, according to data compiled by Bloomberg. Tanzanian regulators granted approval for EABL’s acquisition of 51 percent of Serengeti, at the time Tanzania’s second-largest beer maker, in July 2010.

The conditions of the approval included complying with a requirement that Serengeti “achieves potential growth that is well beyond the level it was able to achieve previously,” the FCC said.

EABL received notification of the revocation-of-merger approval on April 24 and provided a full response, spokeswoman Julie Adell-Owino said in e-mailed responses to questions on Tuesday.

“EABL wishes to inform the public, its shareholders, customers and all other stakeholders of SBL that EABL vigorously disputes the notice and awaits a date for a formal hearing with the FCC,” Adell-Owino said.

EABL’s shares fell 0.3 percent to 304 shillings at 1:32 p.m. in Nairobi, extending its decline to 1.3 percent so far this year.

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