If it is not notoriously using KRA to fight, chase out of the market, and finally buy at "mitumba" stake local beer and beverage companies, EABL is using insider trading to dupe and con local investors.
East African Breweries Limited(EABL) thought to be a Kenyan-based holding company that manufactures branded beer, spirits, and non-alcoholic beverages has now been auctioned to Diageo. Before being overtaken by Kweichow Moutai of China in 2017, Diageo plc a multinational alcoholic beverage company, with its headquarters in London, England was the world's largest distiller.
Diageo is already the majority controlling shareholder of East African Breweries (EABL) and currently holds 395.61 Million ordinary shares of EABL which represents 50.03% of the issued share capital of EABL.
Here is where it gets interesting, DCI should already be at the doors of Mrs. Jane Karuku the Group Managing Director and CEO of EABL who was appointed on 1st January 2021. On Thursday evening, Diageo made an offer worth KES 22.73 Billion to acquire additional shares in East African Breweries Plc (EABL). The offer represents 14.97% of the issued share capital of EABL, which is listed on the Nairobi Securities Exchange.
The offer price is 39 percent above EABL’s closing price of KES 138 on the Nairobi Securities Exchange on Thursday 13th October 2022. Over the last 52 weeks, EABL’s share price has traded in the range of KES 110 to KES 172. Very weird
EABL CEO and other directors did this in June, on NSE , EABL's stock price suddenly dropped to about KES 110 per share down from over KES 172. Then suddenly it rose back to over KES 140 for no reason at all and volumes were also strangely high.
The drop made Kenyan investors and traders panic and sell in losses after buying the shares at KES 192 with hopes of selling at a higher price.
Strangely, Diageo the parent company wants to raise its stake in EABL by buying 118.4 million shares at KShs 192 each.
The person who bought at KShs 110 per share will make close to 100% return at the expense of those who sold in panic as the price dropped. An image of the behavior of EABL stock prices months before Diageo washed Kenyan traders. (Image: Twitter ) So how is EABL chewing Kenyan traders' money on the table where the toothless CMA sits?
On Tuesday, President William Ruto said that the government is keen on expanding the composition of the Nairobi Securities Exchange (NSE), projecting that ten more companies would join the NSE by October 2023.
Will Dr David Ndii tell the President that this case of EABL and Diageo is a suspect case of insider trading?
These are the issues the government should be addressing before it tells Kenyans to join the stock market.
For those saying this was just market manipulation of the events that happened in June, you are wrong because EABL insiders had all the information of the plans that retired president Uhuru and the Kenyatta family had. In June, KRA closed down Senator Tabitha Karanja owned Keroche Breweries over tax arrears, making it the sixth closure in a year.
The Karanja's have been accusing EABL of using KRA to fight it politically and issuing agency notices to all its lenders
The factory has so far incurred losses running to hundreds of millions of shillings and massive job losses.
Speaking on July 21, CEO Tabitha Karanja said the only way the company can be able to pay the taxes accrued, is if it is operational.
To President Ruto, make sure CMA is up to its game.
A rigged market will never offer the much needed confidence to investors.