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Tuskys, Nakumatt write to regulator on merger plan

Tuskys Supermarkets T-Mall branch on Langata Road. FILE PHOTO | NMG
Tuskys Supermarkets T-Mall branch on Langata Road. FILE PHOTO | NMG 

Tuskys Supermarkets has written to the competition watchdog seeking advice on its planned merger with competitor Nakumatt, putting into motion efforts to save the financially-troubled retailer from collapsing.

Dan Githua, Tuskys’ chief executive, Thursday said the retailers jointly wrote a formal notice to the Competition Authority of Kenya (CAK) alerting them of their intended merger while seeking the regulator’s opinion on how to proceed.

Nakumatt has faced an existential threat in recent months after a delay in getting new capital and failure to refinance its obligations saw it default on employees, suppliers and lenders.

A tie-up with Tuskys, which is still subject to due diligence and approval from regional competition regulators, is the latest scramble by Nakumatt whose proposal to receive a bailout from the government was snubbed.
READ: Tuskys owner opposes merger with Nakumatt

“We have filed pre-approval documents with CAK basically explaining to them what the intended transaction is like,” said Mr Githua, in a response to queries by the Business Daily.

CAK director-general Wang’ombe Kariuki confirmed that his office is in communication with the two retailers and had responded to the issue.

A merger of the firms will result in the largest retailer in the country, with rivals such as Naivas Supermarket and Uchumi Supermarkets far behind.

“If they want to have a management agreement, they have to seek an exemption. If they choose to merge, they have to follow the law,” Mr Kariuki said in a telephone interview.

“However, we are aware of the state the retail sector is in. We shall fast-track whichever application they submit.”

Nakumatt’s managing director and part-owner has insisted the retailers are seeking a merger. One of the CAK’s key mandates is to ensure that businesses do not engage in practices that may limit competition to the detriment of consumers.

The regulator is however empowered to grant exemptions in special cases.

These include maintaining or promoting exports; improving, or preventing decline in the production or distribution of goods or the provision of services; promoting technical or economic progress or stability in any industry.

An exception can also be granted if its net effect, whereas lessening competition, is highly beneficial to the public.

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