Brookside given nod to buy rival company
PHOTO | FILE Brookside Dairy workers pack life milk into boxes. Brookside Dairy has been given the green light to fully acquire Buzeki Dairy, a move that now consolidates the business that is associated with the Kenyatta family as the leading milk processor in the East African region.
What you need to know:
Deal previously raised monopoly concerns
Brookside Dairy has been given the green light to fully acquire Buzeki Dairy, a move that now consolidates the business that is associated with the Kenyatta family as the leading milk processor in the East African region.
In a deal estimated to be about Sh1.2 billion, Brookside now consolidates its market share lead of about 44 per cent, although the buyout has previously raised concerns of Brookside becoming a monopoly that may leave small scale dairy farmers hurt.
This move comes even as the firm enters new markets in other African countries like Ethiopia, becoming the first Kenyan firm to do so.
“The Competition Authority authorises the proposed acquisition of all business and assets of Buzeki Dairy Limited by Brookside Dairy Limited,” the Authority’s director general Wang’ombe Kariuki, said in a Kenya Gazette notice on Friday.
The processor had previously acquired other local dairy brands including Ilara, Tuzo and Delamare.
Last year, the processor began the construction of a Sh3 billion milk powder plant, anticipated to double the capacity of milk processed at the plant to 2.4 million litres daily.
Buzeki, which boasted of presence in Kenya and South Sudan, had a daily milk processing capacity of 250,000 litres.
Mr. Wang’ombe had earlier told the Nation that the acquisition will not create a monopoly given that the informal milk sector is still huge, fragmented and there’s room for growth. Nairobi alone has about 2 million consumers of milk in the informal dairy sector, which is usually sold in the neighbourhoods.
ETHIOPIAN MARKET
In September, the processor became the first Kenyan company to enter the Ethiopian market following a 20 per cent acquisition of a stake in Elemtu Milk Integrated Industry, a local processor establishing a Sh277.82 million dairy processor in Sululta, 25km north of Addis Ababa, the Capital.
In the same month, Brookside said it was planning to enter the Nigerian market further reducing overreliance on the Kenyan and East African markets.
Brookside aggregates its milk mainly from small scale farmers and processes about 750,000 litres daily. The smallholder farmers account for about 80 per cent of the national milk output, with the remainder coming from large scale producers.
