Companies

KWAL workers get 3-year job security

Papaya

A MACHINE OPERATOR AT KWAL AT THE JUICE PACKAGING LINE. FILE PHOTO | LIZ MUTHONI | NMG

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Summary

  • The job guarantees are part of the conditions the Competition Authority has attached to the transaction that will see Distell’s stake in the company rise to a controlling 52 per cent.
  • The multinational is buying the additional shares from Centum Investment Company.
  • The move also is seen as delaying Distell’s potential decision to stop local production in favour of imports from other markets.

The competition watchdog has ordered South Africa’s alcohol manufacturer Distell to retain 42 employees of Kenya Wine Agencies (Kwal) — in which it is acquiring an extra 26 per cent stake — for at least three years.

The job guarantees are part of the conditions the Competition Authority of Kenya (CAK) has attached to the transaction that will see Distell’s stake in the company rise to a controlling 52 per cent.

The multinational is buying the additional shares from Centum Investment Company #ticker:ICDC.

READ: CAK okays sale of Centum’s 26.43pc stake in Kenya Wine

Acquirers often cut jobs soon after taking control of companies for various reasons including to reduce expenses and increase efficiency.

The regulator is increasingly seeking to protect scores of jobs for a few years at target companies in recent takeovers, including at Giro Bank and Gulf African Petroleum Corporation (Gapco) which were acquired by I&M Holdings and Total Outre-Mer respectively.

The CAK has ordered Distell to retain 42 factory workers, with their job further secured by a requirement that Kwal continues to produce its brands — Kibao Vodka, Kingfisher, County Brandy, Papaya, Caprice, Viceroy, Cellar Cask and Yatta Juice — in Kenya for at least three years..

“The merged entity ensures that for a period of at least three years, the 42 employees currently working in the production unit of Kwal are not declared redundant or otherwise terminated than in accordance with the provisions of the Employment Act, 2017,” the regulator said in a notice carried in the latest Kenya Gazette notice.

The move also is seen as delaying Distell’s potential decision to stop local production in favour of imports from other markets.

Firms making acquisitions in their industry have often argued that the job cuts are done to eliminate duplication of services, with some departments closed if they are not important to the acquirer.

Distell has production facilities in South Africa, France, Scotland and Ghana.

The company also has interests in companies manufacturing and distributing various alcohol brands in Zimbabwe, Mauritius and Tanzania.

The deal with Centum will give Distell control over Kwal’s management and strategic direction, with the multinational expected to review how the company fits in its global manufacturing and distribution operations.

READ: Value of corporate deals drops to Sh2.6bn in April