Kenya to Dilute Stake in Safaricom in Sh245 Billion Deal With Vodafone

The Government of Kenya is set to reduce its ownership in Safaricom following an agreement to sell a 15 per cent stake to Vodafone Kenya in a transaction valued at about Sh245 billion, a move that will significantly reshape the telco’s shareholding structure.

Under the deal, Vodafone Kenya will acquire 6.01 billion shares currently held by the State at an offer price of Sh34.00 per share, translating to Sh204.3 billion. The offer price represents a 21 per cent premium compared to Safaricom’s last traded price of Sh28.20.

Once the transaction is completed, Vodafone Kenya’s shareholding in Safaricom will rise from 40 per cent to 55 per cent, consolidating its position as the company’s majority and primary strategic shareholder. The government’s stake will fall from 35 per cent to 20 per cent, while public shareholders will continue to hold about 25 per cent.

In addition to the share sale, the government will receive Sh40.2 billion upfront in lieu of future dividends that would have accrued from its retained 20 per cent stake. This brings the total cash inflow to the Exchequer to Sh244.5 billion. A separate Sh68.1 billion transaction involving Vodafone and its parent company Vodacom Group is an internal restructuring and will not be payable to the Kenyan government.

As part of that internal reorganisation, Vodacom Group Limited will increase its stake in Vodafone Kenya to 100 per cent from the current 87.5 per cent through the acquisition of Vodafone International Holdings B.V.’s 12.5 per cent interest. This move will result in Vodacom gaining an additional indirect 4.99 per cent stake in Safaricom.

Following the completion of both transactions, the post-deal ownership of Safaricom will stand at approximately 55 per cent for Vodafone Kenya/Vodacom, 20 per cent for the Government of Kenya and 25 per cent for public investors.

Safaricom’s share price has risen sharply in anticipation of the restructuring, gaining 96 per cent year to date, reflecting strong investor confidence ahead of the ownership changes.