Longhorn buys out Tanzanian publisher to boost marketshare
A man packs books at Longhorn Publishers’ warehouse along Funzi Road in Industrial Area, Nairobi. DIANA NGILA
Longhorn Publishers Kenya has completed the acquisition of a Tanzanian firm, boosting its share of the neighbouring country’s books market.
Dar-es-Salaam based Delah Publishers’ acquisition in January cost Longhorn Sh12.5 million in intellectual property rights and tradeable stock.
Longhorn’s management said the Tanzanian market had the potential to add over half a billion shillings to group revenues over the next eight years.
“We expect to rake in a minimum of Sh72m per year on net sales over the next eight years, and from the market response this far this could very easily more than double,” said Longhorn publishing manager Musyoki Muli.
The firm has announced intention to list on the Nairobi Securities Exchange this year through an introduction. Mr Muli said the Tanzanian market offered a stable revenue growth opportunity since the academic curriculum does not change often like Kenya’s. Prior to buying Delah Publishers, Longhorn operated in Tanzania through a wholly-owned subsidiary launched in 2006.
An African Alliance Investment Bank investor brief on the publisher says Longhorn had a 10 per cent market share in Tanzania as at the end of November.
The note adds that Tanzania is a virgin market with a high growth potential. “There is increased demand for English language materials as the number of schools using English as a medium of instruction is growing.”
Revenues increased
Longhorn’s sales outside Kenya account for 33 per cent of total revenue. The publisher has a presence in Rwanda, and Uganda where the firm operates through a sales agent and a subsidiary respectively.
Revenues increased by 109 per cent to Sh1.1 billion for the year ended June 2011, from Sh527 million in 2010. The growth was driven by strong sales of textbooks in Kenya and other countries in the region. Net profits increased to Sh146 million last year, about six times more than the Sh22 million it made in the 2010 financial year.
The Kenyan publishing industry has benefited from the government’s policy of supplying free text books to primary and secondary schools.
The next stop for the publisher is the Southern African market, said Mr Muli. “Our books have already been approved for use in Malawi and we have started selling through partnership with a local book agent. We are open to getting into new markets depending on feasibility studies and our competencies,” said the manager.
Lead transaction adviser for the listing, NIC Securities, said it was finalising application documents for submission to industry regulator Capital Markets Authority with a target of listing at NSE in this quarter.
Traders at Suntra Investment Bank said Longhorn shares were suspended from trading on the over-the-counter market, signalling that the listing on the exchange is on course.
