Scangroup in a statement Monday said that it has settled the dispute with Nigeria’s Prima Garnet Communications as directed by Lagos’ High Court on December 15.
The Nigerian firm had sued Scangroup’s subsidiary Scanad Nigeria in January 2013, arguing that the Nairobi Securities Exchange-listed company had orchestrated a plan to deny it business.
Marketing communications firm WPP Scangroup #ticker:SCAN is set to launch an advertising joint venture in Nigeria after settling a five-year court case that had blocked its entry into Africa’s biggest economy.
Scangroup in a statement Monday said that it has settled the dispute with Nigeria’s Prima Garnet Communications as directed by Lagos’ High Court on December 15.
The Nigerian firm had sued Scangroup’s subsidiary Scanad Nigeria in January 2013, arguing that the Nairobi Securities Exchange-listed company had orchestrated a plan to deny it business.
Formation of Scanad Nigeria came soon after the Nairobi Securities Exchange’s other affiliate Ogilvy Africa had terminated its agency partnership with Prima Garnet.
The Nigerian firm said it had an agreement with Ogilvy that neither of the companies would enter into new alliances while their partnership was still active.
Scangroup’s CEO Bharat Thakrar, who declined to disclose the terms of the settlement, in an interview said he expects the company to form a joint venture with another Nigerian firm later this year.
“This will allow us to launch creative and media buying in Nigeria,” Mr Thakrar said, adding that the company’s other subsidiaries in the country currently offer research and public relations services.
Advertising services remain the largest revenue source for Scangroup, and is behind the company’s push for launch of the business line in Nigeria as part of its Pan African expansion strategy.
Kenya accounts for about six out of every 10 shillings of Scangroup’s sales, with the rest coming from its regional units in Uganda, Tanzania, South Africa and Ghana.
The company’s reliance on the Kenyan market has reduced over the years as it deepens its strategy of serving multinational clients across multiple countries.
Nigeria is seen as an attractive market due to its status as Africa’s biggest economy. The country, which is exiting a recession, is projected to post a GDP growth of 2.1 per cent this year according to International Monetary Fund (IMF) estimates.
The economic expansion is set to benefit from greater availability of foreign exchange and higher oil production.
Scangroup will take a 24.9 per cent stake in the planned joint venture in line with current limits on foreign ownership, Mr Thakrar said.
Scangroup’s net profit declined 37 per cent to Sh157.3 million in the half year ended June on the back of reduced interest income on its cash holding and a 22 per cent drop in sales to Sh1.9 billion.
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