Unga Group PLC is set to exit the baking business for the second time with the sale of Ennsvalley Bakery to a logistics company as a move to cut costs and improve efficiency, just a decade after it acquired it.
The Nairobi 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.
“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.
Ennsvalley is a premium bakery known for its healthy bread, rolls and pastries. It 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.
Unga Group holds majority ownership of 52% in Ennsvalley Bakery after purchasing shares from NAS holdings in 2014 at the cost of Kes 542 million. NAS Holdings own the remaining 48% stake.
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 per cent of its annual needs, has gone up by nearly 30 per cent, prompting a price rally on the price of bread.
Read also; Unga Group Plc Half-year Earnings drop 44.8% to Kes 83.5 Million.
