State owned wines and spirit firm Kenya Wine Agency Ltd has finally ceded 26 per cent to South African wine maker Distel.
This was the main demand by Distel in order for Kwal to continue enjoying distributorship for its products in Kenya and the East Africa region. These include Amarula, Cellar Cask, Drostdyhof and Viceroy.
Distell will sign an exclusive long-term supply agreement with Kwal. The company recently threatened to pull out of a supply agreement with Kwal unless it was given part ownership. Instead, it planned to set up a subsidiary to market and sell its brands locally. Kwal moved to court to stop Distell claiming it would suffer irreparable damage
The approved transaction, announced by the Privatisation Commission on Friday, will also see Kwal employees acquire four per cent of the company by June 30. Employees will buy the shares through an Employee Share Ownership Plan, the commission said.
The state, which owns 72.65 per cent of Kwal through the Industrial and Commercial Development Corporation, will fully exit the firm within two to four years.
Sale of the remaining ICDC shareholding, about 42.65 per cent, may see Kwal list at the Nairobi Securities Exchange through an Initial Public Offer, which is one of the proposed ways to dispose of the shares besides sale to institutional investors or public tender.
"The approved transaction seeks to ensure the continued viability and growth of the company," the commission said.
The sale will be hinged on improved value, which will dictate the choice of disposal method.
Parliament adopted the privatisation programme and method on January 9, 2013, creating a route for Distell - which is Kwal's major supplier and trading partner - to acquire a stake in the local wine marketer.Kwal is at present 27.35 per cent privately owned.