Johannesburg-based ICI South Africa has revealed that it was forced to take back full ownership of the Sadolin brand name and venture into the Kenyan market when listed Japanese firm Kansai Paints acquired the majority stake in Sadolin Paints East Africa.
ICI, which issued Sadolin Paints a notice of termination in February, has revealed in court documents that Kansai’s Sh10 billion acquisition of its Kenyan partner posed a threat to the movement of its brand, leaving it with no other option but to call off the deal.
The South African firm had a long-running trademark deal with Kenya’s Sadolin Paints, which allowed the local firm to manufacture and sell paints under the Sadolin trade name.
Sadolin Paints East Africa would in turn pay royalties to the South African firm equivalent to two per cent of total sales.
ICI says it learned of Kansai’s acquisition of Sadolin Paints in January through media reports and were alarmed because the Kenyan firm did not give it any notice of the deal before selling a 90 per cent stake.
The Sadolin trademark is owned by Dutch firm Akzo Nobel, which also has a presence in South Africa through ICI. The Kenyan operation signed licence agreements with Akzo Nobel’s South African subsidiary.
“Realising the potential impact an acquisition of Sadolin Paints would have on the Sadolin paint, the respondents (ICI and Akzo Nobel Kenya) decided to take immediate steps to protect its interest since there was a real danger that Sadolin paint will simply be replaced by a Kansai Plascon brand,” says ICI South Africa planning and execution manager Deon Nieuwoudt.