Businessman Chris Kirubi’s Haco Industries is set to relinquish its manufacturing and distribution of BIC stationery and personal care products to French multinational Société BIC which owns the brand.
The amount Haco will be paid in the transaction, expected to be completed by January 1, 2019, was not disclosed. The deal will bring to an end nearly 40 years of Haco’s BIC franchise that saw it manufacture and sell branded stationery, lighters and shavers.
BIC will acquire Haco’s semi-automated production plant located in Kasarani as part of the transaction which the Kenyan firm says gives it an opportunity to diversify and grow in the regional markets.
“My success is Kenya’s success and after nearly 40 years of fruitful collaboration with BIC, and having built the business to become Kenya’s number one stationery manufacturer and distributor, this transaction is tangible proof of BIC’s confidence and belief in Kenya and the growth potential of the region,” Mr Kirubi said in a statement.
“Until the completion of the transfer, BIC and Haco will continue to work together for the mutual benefit of all stakeholders and the respective businesses to achieve a smooth transition.”
The deal adds to the emerging trend in retail and fast moving consumer goods sector, where multinationals have squeezed out local franchises by buying them out or forcing them into joint ventures.
Such moves have been seen to arise from the desire to take a bigger chunk of profits as well as enforce standards, including pricing, marketing and customer service.
Fashion retailer Deacons East Africa has, for instance, suffered a major revenue setback after it relinquished prime Woolworths and Mr Price franchises to South Africa-based owners.
The BIC buyout is set to take away one of Haco’s major revenue lines, with the BIC brand of pens having the largest market share in the regional stationery industry. Haco, a private company, does not publish its results but its annual sales top the Sh1 billion mark.
BIC says the transaction is in line with its continued growth strategy in Africa, with the multinational attracted by a positive outlook for the stationery market.
“This is a tremendous opportunity to strengthen BIC’s position in one of the most promising markets for BIC products in the world,” Société BIC chief executive Gonzalve Bich said in a statement.
“We estimate the regional stationery market to be around 1.5 billion units annually and growing mid to high single-digit.”
Besides their high quality, sales of BIC pens have been helped by strong relationships with large customers, including companies that order branded units from Haco.
The deal with BIC comes soon after Mr Kirubi regained full control of Haco with the buy-back of the 51 per cent stake he had sold to Johannesburg-based Tiger Brands. In June 2008, he sold the stake in the firm to Tiger Brands for more than Sh300 million and bought it all back after the partners disagreed over the company’s strategic direction.