Companies

Redhouse buys advertising unit in multi-million deal

ngomeni

The buyout will see Esther Ngomeli (pictured), the founder and current managing director of Media Edge Interactive, pocket a significant amount of money and also acquire “significant equity” in Redhouse Group. Photo/FILE

Media services company Redhouse has acquired the advertising subsidiary of joint venture partner Media Edge Group in a multi-million shilling deal.

The move gives it more muscle to compete with market leader Scangroup.

Redhouse already has majority shareholding of Media Edge Group, and the transaction which involves a cash and share swap gives it full ownership of Media Edge Interactive.

The buyout will see Esther Ngomeli, the founder and current managing director of Media Edge Interactive, pocket a significant amount of money and also acquire “significant equity” in Redhouse Group.

“The deal involved cash and shares swop that enabled shareholders of Media Edge Interactive to be equity participants in Redhouse Group,” said Koome Mwambia, the chief executive for Redhouse.

“Mrs Ngomeli, the founder of Media Edge, will effectively hold significant equity in the holding company Redhouse Group Limited.”

Redhouse had applied to the competition watchdog for approval to acquire the “entire issued share capital” of the subsidiary.

The two firms had combined turnover of Sh371 million at the time of acquisition, which Mr Koome hinted has grown significantly since the application was lodged at the Competition Authority of Kenya.

Start-up media services firm Redhouse Group entered the Kenyan market in August 2012 setting up its own public relations, advertising, and media buying unit.

To fast-track its foray into the market, Redhouse tapped experienced executives from its rival Ogilvy East Africa where Mr Mwambia was chief executive. It also hired former Ogilvy Kenya PR managing director Okoth Obado for a similar role at Redhouse PR.

READ: Redhouse takes on Scangroup in TBWA deal

Armed with a capital base of Sh430 million, Redhouse Group acquired, through a joint venture, a majority stake in Media Edge Group which runs similar businesses.

Media Edge Group subsidiaries include Media Edge Public Relations, Outdoor Care Kenya and Media Edge Interactive, which has now been fully bought out by Redhouse.

Redhouse chairman is Anthony Wahome whose business interests include crest International Schools, Linksoft Group of Companies and Rose of Sharon Academy. The Group plans to buy out the remaining Media Edge subsidiaries.

“The approach is informed by the long-term plan by Redhouse Group to build independent but wholly owned specialist marketing companies,” said Mr Mwambia.