Nakumatt secures Sh3bn KCB loan for Shoprite buyout
Shoppers outside the main entrance of the the new Shoprite outlet in Kano, northern Nigeria. Shoprite operates 1,334 corporate and 406 franchise outlets in 17 countries across the continent. Photo/FILE AFP
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The loan is expected to fully finance the buy-out, according to the Nakumatt Holdings managing director Atul Shah.
Earlier estimates had put the buyout at about Sh4 billion, but it is understood the price may have dropped to reflect the rebranding and employee absorption costs.
Nakumatt is understood to be planning negotiations for the Uganda Shoprite acquisition to start in March after end of its current financial year.
Nakumatt supermarkets has signed a Sh3 billion loan deal with KCB to finance the acquisition of three Tanzanian stores previously owned by giant South African retailer Shoprite.
The loan is expected to fully finance the buy-out, according to the Nakumatt Holdings managing director Atul Shah.
“The acquisition of the three Shoprite Tanzania stores was 100 per cent financed by KCB. We are set to start operations early next month,” said Mr Shah in an interview.
Earlier estimates had put the buyout at about Sh4 billion, but it is understood the price may have dropped to reflect the rebranding and employee absorption costs.
The Kenyan retailer has just completed buying out the Tanzania Shoprite outlets, and has currently shut the stores for repairs and rebranding ahead of re-opening.
Mr Shah says the supermarket has absorbed all the former Shoprite employees “who were willing” to work under Nakumatt. A court case filed by the Shoprite employees had delayed the acquisition, before an agreement was reached on their termination dues.
The Shoprite employees had moved to the labour division of the High Court of Tanzania filing an injunction under the Tanzania Union of Industrial and Commercial Workers (Tuico) laws blocking transfer of the business on the grounds that it may render them jobless and result in loss of their terminal benefits.
The tussle attracted attention of the industry regulator the Fair Competition Commission (FCC) of Tanzania until last month, when it allowed the takeover to proceed. Mr Shah further said Nakumatt is also eyeing the acquisition of Shoprite stores in Uganda.
“We are open to the talks for possible buyouts but am not able to open up beyond that given that we have binding agreements with Shoprite,” said Mr Shah.
A source at Shoprite told the Business Daily Tuesday that the South African retailer is looking for a potential buyer in Uganda in line with the group’s plans to exit the East African market.
Shoprite operates two stores in Kampala, Uganda which it opened in 2000.
Nakumatt is understood to be planning negotiations for the Uganda acquisition to start in March after end of its current financial year.
Shoprite exits the Tanzanian market after about 12 years in the country.
The retailer faced accusations of importing the bulk of its products from its mother company in South Africa, allegedly failing to promote the Tanzanian manufacturers.
The acquisition gives Nakumatt a bigger presence in Tanzania where it debuted in December 2011 with the 34,000-square feet Nakumatt Moshi outlet.
Shoprite Group of Companies is one of Africa’s largest food retailers. It operates 1,334 corporate and 406 franchise outlets in 17 countries across the continent and the Indian Ocean Islands.
Shoprite was previously the biggest retailer in Tanzania ahead of rivals such as Shreejis Supermarket, Shoppers Supermarket and the high-end Village Supermarkets.
