23 August 2013

Kenya: Massmart Confirms Naivas Bid, Targets Fastfood Entry

SOUTH African retailer Massmart has for the first time confirmed it is interested in buying a major stake in Kenyan retailer Naivas.

The retailer's chief executive Grant Pattison told CNBC Africa that the speculations of the intended acquisition are true. He added the retailer is also looking for partners in food retail in Kenya meaning that the company is seeking a slice of the country's growing fast food business.

"We are interested in the (Kenyan) market and rumours in the local media are all true," Pattisson told the TV station. He however did not give a timeline as to when the deal will be concluded.

In its financial results for the period ended June 23, Pattisson revealed the retailer has acquired sites in Kenya and Angola for its brand known as Game. It was not immediately possible to confirm if the said site acquisition are related to the ongoing talks with Naivas.

"Following the successful opening of a Builders Warehouse in Francistown, Botswana we have four more Builders stores planned for Mozambique and Zambia and have secured sites in Kenya and Angola for Game. We have developed a new food format which we will be trialling in West Africa before the end of the year and continue to look at east Africa as well," Pattson said in the statement posted on the company's website yesterday.

The company's expansion plans into Kenya may however be derailed by an ongoing family feud at Naivas pitying the children of its founder Peter Mukuha Kago who died on May 6, 2010. He is succeeded by his wife and nine children, amongst them six daughters and three sons.

In a suit before the high court, one of the brothers Newton Kagiha Kagiha has accused his younger brother Simon Gashwe of obtaining a letter of administration fraudulently by forging his signature and that of his two sisters.

Kagiha wants the court to issue an injunction stopping his brother from selling, advertising, issuing, attaching or dealing with Naivas Limited shares and any other of the late Mukuha's assets until the case has been dispensed with.

He says if the Naivas and Massmart deal is allowed to continue, it would defeat the interests of other beneficiaries of Mukuha's estate.

He alleges that in the deal, Naivas directors are expected to sell off a 51 per cent stake valued at over Sh3 billion to Massmart giving it a controlling interest in the retail chain.

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