Standoff as community fights to buy Lipton Tea assets
A tea plucking machine in operation at a tea estate in Kericho.
Plans by European private equity group CVC Capital Partners to sell tea estates it purchased from Unilever in Kenya less than three years ago have run into headwinds as a consortium of local cooperatives fight to rival Sri Lanka’s Browns Investment Plc and agricultural firm Sasini for the multi-billion shilling assets.
Insider sources said that CVC Capital Partners has received bids by Sasini and Browns even as community groups and a consortium of local co-operative societies stepped up a fight to be included in bids for the Lipton Tea assets, which include tea plantations and leaf processing factories.
In the latest development, an association of communities from Kericho, Bomet, Nakuru, Nandi, and Narok counties has backed an expression of interest by a consortium of co-operatives led by Sinendet Tea Multipurpose Co-operative in buying the estates on behalf of locals.
The group has written to the board of CVC-owned Lipton Teas and Infusions backing the expression of interest by the consortium.
“The Lipton and Teas and Infusions is doing a good job within these lands in Kipsigis country and we wish to applaud you on that and also your endorsement of the UN guiding principles on business and human rights, the International Labour Organisation’s declaration on fundamental principles and promote the land rights of the local communities,” the Kipsigis Community Clans Organisation said in a letter to Lipton’s board last month. “This includes your company’s commitment to adhere to the principles of free, prior, and informed consent with regard to the use and transfer of property or land. This is an important and historic issue for us as Kipsigis people who are the local community whose lands were taken by force” the letter further stated.
The consortium wants to buy the Lipton Kenya estates, which comprise 11 plantations and eight factories across the Kericho, Bomet, and Limuru counties in western Kenya’s tea-growing heartland.
CVC acquired the Lipton estates as part of its €4.5bn (Sh636.13 billion) purchase of Unilever’s tea division, then named Ekaterra, in 2021. Private equity firms Advent International and Carlyle had walked away from buying the Unilever tea business because of concerns about the working conditions on its plantations.
Luxembourg-based CVC Capital Partners is yet to respond to the expression of interest by the Sinendet Tea Multipurpose Co-operative-led consortium.
Both Sasini and the Colombo-headquartered Browns did not comment on their interest in the Lipton Tea assets while CVC did not respond to queries on the Lipton Tea asset sale plans. The Sri Lankan firm only last year concluded another deal where it purchased James Finlays tea assets in Kenya.
Kenneth Langat, a lawyer representing Sinendet said the group would not relent in its quest to own the tea estates up for sale. “We want to pay fair value for these assets and own them as a community. We don’t want them for free” he said in an interview.
“We have structures to acquire and manage the business so that we can correct the mess that was created by multinational firms that have perpetuated inter-generational poverty for the community over the decades” Mr Langat added.
The consortium, whose combined membership exceeds 340, 000, accused CVC Capital of ignoring its expression of interest in purchasing the Lipton tea estates on behalf of the local community.
“More cooperatives are set to join the consortium and own estate assets on behalf of the community. They want to join and restore a sense of ownership for the community” Mr Langat said.
The consortium wrote to the board of CVC-owned Lipton Teas and Infusions in February expressing an interest in purchasing the estates on behalf of the local community.
“There is growing pressure for the local community to move from being passive observers to being shareholders so they can derive direct financial benefits,” the group wrote in a letter to Lipton’s board.
“The local community is a key stakeholder but has always been ignored in prior transactions. We are now under increasing pressure from our membership to address this issue” the consortium also said in its letter to the Lipton’s board.
The consortium said it could fund the acquisition of Lipton Tea assets.
“We have demonstrated this whenever we needed to raise capital from members for investment. Our consortium now has more than 340,000 members. We expect that this will increase to over 600,000 members in due course as other co-operatives join our consortium. So our capacity has increased significantly” the consortium wrote to the Lipton board.
