Sameer Africa Ltd., a Kenyan tire maker, is negotiating with an Asian investor to buy 40 percent of its manufacturing unit to fund a plan to boost productivity, Managing Director Allan Walmsley said.
The company, based in Nairobi, needs at least 2 billion shillings ($22.8 million) to upgrade its factory in the Kenyan capital to increase production, Walmsley said in an interview in the city on July 17. Competitors in China are able to manufacture five times as many tires as Sameer daily, he said.
“We are a looking for a partner who can provide both technical expertise and equity,” Walmsley said. “We are still a few months away from reaching an agreement in principle.”
Sameer Investments Ltd., Sameer Africa’s majority shareholder, in December ended its five-year relationship with Bridgestone Corp. when it bought the Tokyo-based company’s 14.9 percent stake, boosting its ownership to 72 percent. Sameer’s stock has surged 61 percent so far this year, outpacing an 11 percent increase in the NSE All-Share Index.
Bridgestone “offered little by way of technical assistance to our tire-manufacturing division” during the two companies’ partnership, Sameer said in its 2013 annual report. A strategy seeking a new partner would enable the tire maker “to upgrade our factory equipment, especially in terms of tire assembly and upstream factory process equipment and will enable us to produce tires faster and to produce those sizes that are currently beyond our capability.”
Sameer currently exports to Rwanda, Uganda, Tanzania, Djibouti and Burundi and plans to make forays into Nigeria, Ghana and the Democratic Republic of the Congo, according to Walmsley. Naushad Merali, ranked by Forbes as Africa’s 48th richest person, plans to sell more than 14.9 percent of his stake in Sameer Africa in the next three months, the Nairobi- based Business Daily newspaper reported in May. Merali owns 100 percent of Sameer Investments.
“We are not prepared to become a minority shareholder in this new arrangement,” Walmsley said. “And I do not foresee our partners negotiating for a bigger share for they know we understand the region and markets better.”
Sameer tripled profit to 401.2 million shillings last year after it sold part of its holding in leasehold land. Sales declined 1.2 percent to 4.03 billion shillings.