A tea estate. There have been reports of serious human rights violations allegedly committed by some businesses, especially in the agricultural sector.

| File | Nation Media Group

How Sri Lanka’s Browns beat Sasini to Lipton Tea Kenya deal

Sri Lanka’s Browns Investment Plc dangled a “community development and empowerment” card in the battle for Lipton Tea assets in Kenya, helping the multinational firm to beat Sasini to the deal that would hand it control of 20 percent of the country’s tea industry.

Sources said Browns’ pitch for the Lipton assets heavily centred on community welfare including a discounted 15 percent stake for the local community in Kericho and Bomet where the estates are situated, community development support, guaranteed annual dividend payouts, and skills development for employment eyeing youths—winning it the backing of President William Ruto’s government.

“The community empowerment and jobs skilling proposals carried the day for Browns. The Government of Kenya bought their ideas and even helped to identify the opportunities that communities would reap including the development of schools and hospitals and job training. Sasini had no chance against Browns following the government backing” a source close to the transaction said without disclosing the value of the deal.

“Sasini’s pitch was mainly on expertise and experience in the tea industry which was not enough given the bag of promises by their rival for the deal. The financial might of Browns was also an undoing to Sasini’s bid” the source added.

Browns will cede a 15 percent stake from the Lipton assets to local communities—mirroring an offer it made when it acquired James Finlay’s assets in Kenya two years ago for Sh3 billion.

But unlike in the James Finlay deal where it ceded the stake to Kipsigis Highland Cooperative Society, the reserved stake in the Lipton deal will be handed to a Community Welfare Trust (CWT) and an initial Sh1 billion handed for community support programmes. Browns and Lipton will also invest in a skills development and transfer programme that was inaugurated by President Ruto at the Lipton Tea and Innovation and Technology Academy at Kabianga University in February.

On Tuesday, Lipton Tea announced that it had agreed to terms that would pave the way for the transfer of its assets in Kenya, Rwanda, and Tanzania to Browns.

“Browns is the perfect partner with credibility, capabilities, and scale to work with us to raise standards in the whole tea industry,” Liptons Teas chief executive officer Natahlie Roos said.

In Kenya, Browns will take over Lipton Kenya estates, which comprise 11 plantations and eight factories across the Kericho, Bomet, and Limuru counties in western Kenya’s tea-growing heartland. The multi-billion Liptons Teas assets were purchased by European private equity group CVC Capital Partners from Unilever in Kenya less than three years ago. Industry estimates show that the takeover by Browns will hand the Sri Lankan firm a 20 percent control of Kenya’s overall annual tea output and a 50 percent market share among the tea producers in the country.

A consortium of local co-operatives, which had been hopeful of securing the Lipton Tea assets, on Tuesday expressed disappointment at the outcome.

“Communities in Kericho and Bomet are dejected because their offer to buy the assets was never given attention. Instead, we now have another foreign firm coming to occupy close to 60 percent of their ancestral land” Kenneth Lang’at, a lawyer representing the consortium of co-operatives led by Sinendet Tea Multipurpose Co-operative that had written to CVC Capital expressing interest in purchasing the estates on behalf of the local community.

“The proposals we had such as having a CWT are the very proposals that Browns used to convince the government ahead of the takeover. We feel disappointed” the lawyer added.

CVC acquired the Lipton estates as part of its €4.5bn (Sh653.15billion) 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.

The Sinendet-led consortium, whose combined membership exceeds 340, 000, has offered to fund the purchase of the Lipton assets through member contributions and supplemented with a bank loan.

“We were ready to pay fair value for the assets, but we were never given a hearing. Our birthright has now been sold to a foreign firm that will now control the country’s tea export business. We got a raw deal of tokenism. They are making decisions for us” Mr Lang’at said.