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PD Reporter and Xinhua

Kenya’s competition watchdog has said it anticipates mergers and acquisitions in the manufacturing, financial services, information communication and technology (ICT) sectors this year.

Raphael Mburu, the merger and acquisitions manager at the Competition Authority of Kenya, told a virtual press conference that the outbreak of the Covid-19 pandemic has caused a lot of realignments as businesses seek to boost their resilience.

“As the economies open up, we expect mergers as companies adopt the new normal,” Mburu said.

He observed that mergers and acquisitions are a global phenomenon due to the mobility of capital across international boundaries. 

Mburu revealed that the opening up of economies in regions such as Europe will have a positive effect on the merger activities in Kenya. 

Pandemic spread

He said that initially when the Covid-19 pandemic spread into the country in 2020, a lot of companies were hesitant to use their funds as they adopted a wait and see approach. 

According to the industry regulator, there has been an increase in the number of applications for mergers and acquisitions in the past two months, and if the trend continues, it will result in more transactions as compared to last year. 

Early this year, Allianz, one of the world’s leading insurers and asset managers and Jubilee Holdings Ltd announced the completion of the previously signed agreement for Allianz to acquire a 66 per cent stake in the Jubilee General Insurance Company in Kenya.

In 2019, two major mergers were witnessed with KCB Bank acquiring National Bank from shareholders holding 297,130,033 issued ordinary shares out of 338,781,200 issued ordinary shares, representing 87.7 per cent by the offer closure date on August 30.

Another major merger was the acquisition of NIC Bank by CBA Bank to form one of the biggest banks in Africa based on assets.

The two banks announced the deal in January, in which the then NIC Group shareholders would own 47 per cent of the merged entity and CBA shareholders 53 per cent.

Central Bank said the merged entity would have a market share of 9.9 per cent and a customer base of over 40 million people in East Africa.