, NAIROBI, Kenya, Nov 17 – Merger plans between Nakumatt Holdings and Tuskys Supermarket are in doubt after Wow Beverages opposed the decision.
WOW Beverages through their lawyers Mungu Kimeeto and Company have written to the Competition Authority of Kenya opposing the matter citing that the merger could hinder chances of recovering debt owed to them.
The Company says Nakumatt owes the firm Sh76 million.
“The nature of these confidential arrangements currently ongoing between the two proposed merging parties is therefore likely to directly have an impact on our clients’ position as a creditor and supplier,” the firm says in a letter seen by Capital FM Business.
They blame Nakumatt for failure to involve them in the proposed merger negotiations.
The Troubled retailer applied for an administration order under the insolvency act.
In papers filed at the High Court, the directors of the Supermarket chain proposed Peter Kahi of PKF Consulting Limited to be appointed as the administrator with a view of turning around the supermarket.
Nakumatt considers that the administration route provides it with the best opportunity to effectively restructure its business.
An administration, unlike bankruptcy, aims to rescue the company and gives more control to the directors who have the option of appointing an administrator.
Tuskys and Nakumatt have confirmed they have been holding “confidential discussions” to thrash out a strategy with the aim of creating a joint approach that will salvage struggling Nakumatt.
In a joint statement, the two retailers, however, say a merger deal is yet to be finalized citing the complexity of the transaction which involves a number of stakeholders including employees, suppliers, landlords and lenders.
“These confidential discussions are continuing and although the engagement has been positive and good progress has been made, it is important that we acknowledge that a formal agreement is yet to be reached and will be subject to notification and approval by regulators and lenders.”
The discussions between the two giant supermarkets have focused on exploring potential options for synergies, co-operation, and business integration.
The statement shines a light on one the reasons Tuskys has agreed to discuss a rescue plan for Kenya’s biggest retailer.
“The founders of Tuskys and Nakumatt have enjoyed a close business and family relationship spanning more than four decades and share a common heritage as pioneer Kenyan retailers from Nakuru County and are excited by the opportunity for the business integration,” notes the statement.
Tha families of Nakumatt founder Maganlal Shah and Tuskys Joram Kamau – who now run the retail chains – have in the past come to the rescue of each with other in different situations. trace their roots