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 The Competition Authority of Kenya (CAK) has approved Hair Manufacturing Kenya Limited to acquire certain assets of Style Industries Limited.

However, this approval comes with the condition that the buyer must retain at least 70 per cent of the seller’s workforce, under terms no worse than their current ones, for a year following the closure of the deal.

CAK stated: “The transaction qualifies as a merger under Section 2 and 41 of the Competition Act No. 12 of 2010, which stipulates that a merger or takeover may occur when an undertaking directly or indirectly acquires control over another business within Kenya.”

Exiting the market

With Style Industries, known for its hair products under the Darling brand, exiting the market to be replaced by Hair Manufacturing, CAK emphasized that this deal would not alter market structure and concentration, as other firms still hold 95 per cent of the market share.

Furthermore, CAK assessed the deal’s impact on public interest. The parties involved indicated that the seller’s business position and prospects were unfavourable.

Without this deal, CAK noted, the seller would likely exit the market, resulting in job losses and asset depletion.

“Therefore, the proposed transaction will have a positive effect on public interest. However, the transaction will also elicit negative public interest concerns. Specifically, it will lead to the loss of 652 jobs which is equivalent to 30 per cent of the target’s 2,171 employees,” CAK said.

Despite concerns about job losses, CAK concluded that the transaction would ultimately have a positive effect on public interest, given the preservation of some jobs and assets.

Analysing the deal’s impact on competition, CAK considered the post-deal market share of the involved firms.

With the industry’s revenue in 2022 estimated at approximately Sh80 billion and the seller’s market share at only 5 per cent, CAK determined that the market structure and concentration for hair extensions and wigs would remain unchanged, thereby not substantially lessening competition in the sector.

“The structure and concentration of the market for hair extensions and wigs will not change in Kenya, as a result of the proposed transaction is unlikely to lead to a substantial lessening of competition in the market for hair extensions and wigs,” CAK said.