Danone has agreed to acquire a 40% stake in East Africa’s largest dairy manufacturer Brookside Dairy - its second investment on the African continent in less than a year.
The minority stake was reportedly acquired by Danone for an undisclosed sum from controlling shareholders, the Kenyatta family - relatives of Kenyan President Uhuru Kenyatta.
Since its inception in 1993, Brookside Dairy has grown to become East Africa’s leading dairy manufacturer, producing a wide range of dairy products including fresh and UHT milk, flavoured milk, yogurt, butter, cream, ghee, and lala.
It currently boasts operations in Kenya, Uganda, and Tanzania, and exports to Rwanda, Burundi, the Indian Ocean Islands, Egypt and the Middle East.
Through its involvement, Danone expects Brookside to tighten its hold on the East African dairy market.
“By uniting Danone’s international expertise in fresh dairy products with Brookside’s regional expertise and robust supply chain, the partnership will enable Brookside’s growth acceleration by expanding its product portfolio and strengthening its geographical presence in key markets in the East African region, including Uganda and Tanzania,” said a statement issued by Danone.
“The partnership will significantly enhance the platform Danone is currently building in Africa.”
Danone has had a rumored interest in Brookside Dairy since earlier this year.
It refused to comment on reports from Africa in January 2014 that it was in talks with private equity firm the Abraaj Group to acquire minority shareholding in Brookside.
The reported talks never came to fruition and the Abraaj Group still holds the stake it acquired for around US$18.7m (€13.7m) in 2009.
Today's deal comes less than a year after Danone entered into an agreement with the Abraaj Group to acquire one of West Africa's largest dairies, Fan Milk.
Danone and the Abraaj Group hold 49% and 51% stakes in Fan Milk, which operates in Nigeria, Ghana, the Ivory Coast, Burkina Faso, Benin, and Togo. Danone’s interest in Fan Milk will, however, increase gradually into a controlling stake.
It also boasts operations in South Africa, Morocco, and Egypt.