KENYA – Unga Group, one of the big millers in Kenya, has announced the planned sale of Ennsvalley Bakery assets to cold storage and cold chain logistics company BigCold Kenya subject to satisfaction of certain conditions.
The company will be selling its bread business to BigCold as it seeks to cut costs and improve efficiency.
Ennsvalley is a premium bakery known for its healthy bread, rolls and pastries and supplies its products to major supermarket chains throughout Kenya, major hotels and restaurants, airlines, embassies, United Nations, Government Institutions, Fast food chains and schools. The bakery is one of the largest in Kenya established 37 years ago by a Swiss baker.
“Following discussion, BigCold Kenya Limited and Ennsvalley Bakery Limited have entered into an asset purchase agreement on July 26, under which, subject to satisfaction of certain conditions and upon completion, Ennsvalley shall sell and BigCold shall purchase Ennsvalley’s assets,” said Unga Group in a notice.
Unga Group holds majority ownership of 52% in Ennsvalley Bakery after purchasing shares from NAS holdings in 2014 at a cost of KSh542 million (US$4.99 million) while the remaining 48% stake is owned by NAS Holdings.
“The Nairobi Securities Exchange-listed company had in the 1990s sold its stake at Elliots Bakery and acquired Ennsvalley, the makers of premium bread in 2014 as it sought to diversify its income and cut overreliance on milling of maize and wheat flour”
According to Unga Group, further information on the asset purchase agreement will be disclosed upon satisfaction of the set conditions and completion of the transaction.
The company has advised investors to exercise caution while dealing in its shares at Nairobi Securities Exchange.
The sale of the bakery business comes at a time when bakers are struggling with the high cost of production amid low demand for bread due to reduced purchasing power by consumers as a result of decreased income.
The cost of wheat at the international market, where Kenya acquires over 75 percent of its annual needs, has gone up by nearly 30 percent, prompting a price rally on the price of bread.
The company has been grappling with competition in the baking business from firms like mini bakeries, retail chains like Naivas and Quickmart as well as established bakers like Broadways, whose cost of bread is lower when compared with Ennsvalley high-end variety.
The human and animal nutrition grain business accounts for 49 percent and 51 percent of the Group’s revenues respectively.