Kenya’s Comesa corporate merger fees hit Sh69m

Kenya bagged the third highest amount of merger and acquisition fees collected by the Comesa Competition Commission in 2014, indicating the country’s robust cross-border corporate unification in the region.

Of the eight-member countries who have received their portion so far, Kenya was third with an allocation of Sh69 million out of the Sh138 million of total fees that its companies generated in mergers across the region.

All merger and acquisition fees collected in the Common Market for Eastern and Southern Africa (Comesa) region is shared among member countries in a pre-determined formula.

Half of the amount is retained by the 27-member bloc’s Competition Commission and the rest is shared among the national competition authorities of the respective member states, which have registered the deals based on an equitable revenue-sharing arrangement.

Statistics by the Comesa Competition Commission showed that the number of merger notifications filed in 2014 jumped to 44 from 13 the previous year, marking a 238 per cent rise. The deals in 2014 earned $10.6 million (Sh956 million).

Eight members including Kenya, Egypt, Zambia, Malawi, Ethiopia, Seychelles, Swaziland and Zimbabwe have received their share of the fees collected in 2014. Egypt has bagged the highest amount estimated at $0.94 million (Sh85.2 million) closely followed by Zambia with $0.82 million (Sh74.5 million).

“Disbursements to the other member states are expected to be done as soon as their relevant authorities provide their bank account details to facilitate transfers due to them,” Comesa said in a statement.

Companies eyeing the regional market through mergers and acquisitions may soon get a reprieve as Comesa considers lowering by up to 60 per cent the fees charged to approve such deals.

Comesa secretary-general Sindiso Ngwenya said last week many companies had raised concern over the Sh44 million ($0.5 million) notification fees and called for a review. He said Comesa was considering passing a recommendation to reduce the mergers and acquisitions fees to Sh18 million ($0.2 million).

The lower fee would make it particularly easier for medium-sized entities that may find the current fee high.

“This means there shall be an increase in the number of notifications by firms involved in mergers and acquisitions that subscribe to the Comesa Competition Commission,” Mr Ngwenya said. Currently, the filing fee stands at whichever is lower between $500,000 and 0.5 per cent of the merging parties’ combined turnover in the Comesa region.

Reduction in the filing fees for merger and acquisitions would bring further relief to firms eyeing new opportunities in the region.

The Comesa Competition Commission last year revised its rules so that the fee would only apply to mergers that affect at least two of the 19 markets and for firms with a minimum combined turnover of Sh455 million ($5 million).