The Competition Authority of Kenya (CAK) has approved acquisition of chemical distributor Desbro (Kenya) Limited by Brenntag (Holding) B.V., a unit of Germany-based Brenntag Group.
The regulator gave the go-ahead for the transaction on condition that Brenntag retains 80 employees who currently work at the firm for a period of one year.
Brenntag is a chemical distributer in Europe, the Middle East and Africa involved in the manufacture of food additives, preservatives, oil and gas, adhesives polymers, among others.
“Based on the foregoing, it is the authority’s view that the proposed transaction is unlikely to lead to a substantial lessening or prevention of competition in the market for distribution of industrial chemicals in Kenya,” said the CAK. The proposed transaction will see 100 percent acquisition of the business and assets of Desbro by Brenntag.
The assets include intellectual property, business records, equipment, goodwill, licences, stock, third party rights and employees.
In a previous statement regarding the acquisition, Brenntag had indicated that it targeted the Kenyan firm due to its broad portfolio of products and specialty chemicals that are sold to diverse markets in East Africa and the Middle East. Desbro’s product offering includes plastics, textiles, water treatment, coatings and construction.
“With Desbro we are acquiring a leading and well respected market player. The company provides us the needed market expertise, organisation and infrastructure to build on our strategy to claim outstanding Africa coverage,” Karsten Beckmann, CEO Brenntag Europe, Middle East and Africa told news outlets in September. A vertical relationship currently exists between Brenntag and Desbro with their commercial activities overlapping in the business of distributing industrial chemicals, the regulator said.
The combined turnover of two firms for 2017 was valued at over Sh1 billion, meaning that the transaction meets the threshold for full merger analysis. The CAK said the merged entity will have a market share of less than five percent.