Dubai-based conglomerate Al Futtaim will own a third of the Kenya Vehicle Manufacturers, one of the three motor vehicle assemblies in the country, through its take-over of CMC Holdings.
In a statement on Friday signed by CMC's acting managing director Mary Ngige, the motor dealer said Al Futtain Auto & Machinery Co. intends to acquire 100 per cent of CMC Holdings, which will result in a delisting from the Nairobi Securities Exchange.
Al-Futtaim, the largest distributor of automotive products in the United Arab Emirates, will gain full control over CMC's businesses. It has already secured backing of over 75 per cent shareholding.
"Under the proposed offer, each shareholder of CMC shall be offered Sh13 for each ordinary share held," Ngige said. The deal is worth $86 million (Sh7.5 billion).
Billionaire businessman Peter Muthoga's Andy Forwarders (24.73 per cent) and Kingsway Family Holdings (12.5 per cent), owned by former CMC chairman Jeremiah Kiereini's family, were the first to commit to the deal on June 26.
Current chairman Joel Kibe and Paul Wanderi Ndung'u - who are jointly the second largest individual shareholders of CMC - committed on September 5. Minority shareholders will have their say at an Extra-ordinary General Meeting to discuss the take-over.
"CMC shareholders who do not wish to accept the take-over offer and whose shares are not acquired in the circumstances provided in section 210 of the Companies Act will remain minority shareholders in an unlisted company, thereby limiting the liquidity of the trading of their shares," the statement read in part.
Al Futtaim Group said it has no intention at present to dispose of shares after the acquisition, and will operate CMC as a subsidiary.
CMC has subsidiaries in Uganda(Cooper Motor Corporation Ltd) and Tanzania (Hughes Motors Ltd and Hughes Agricultural Ltd). It also owns 33 per cent of KVM, second after the Government of Kenya's 35 per cent. DT Dobie (acquired by Toyota Tshusho Corp) owns the remaining shares in KVM.
KVM says it produces a range of 11 vehicle models, including Nissan series, Jaguar Land Rover models, Iveco, Mazda, Mercedes, VolksWagen, Hyundai and Eicher. Its investments in buildings and plant are estimated at $4 million (Sh350 million). It sits on 40 acres, 18 of which are still undeveloped. It has an installed capacity of 6,600 vehicles annually, single shift.
Other vehicle assemblers are General Motors East Africa, which accounts for half of locally assembled units, and Mombasa-based Associated Vehicle Assembly (AVA), where Hino Motors and Tata Motors will be assembling commercial trucks.
CMC Holdings has just risen from nearly two years of boardroom wars that unearthed a scandal of secret offshore accounts which saw the Capital Markets Authority step in, freezing its shares at the NSE. The scandal has seen the CMA introduce a raft of measures for boardrooms of listed firms, including capping the age limit for directors.