Regulator clears Oman’s cement firm 60pc stake sale

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Regulator clears Oman’s cement firm 60pc stake sale


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CAK Director-General Wang’ombe Kariuki. FILE PHOTO | NMG

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Summary

  • Oman’s Raysut Cement, which has market presence in Tanzania, Somalia and Sudan and had been eyeing to acquire ARM Cement, wants to sell 60 percent stake to a Chinese firm, Zou Fengqi.
  • The Competition Authority of Kenya (CAK) has exempted the two from filing a notification before it, saying the transaction meets the threshold under the Competition (General) Rules, 2019.
  • Firms trading regionally are by law required to seek regulator’s approval for acquisitions and mergers

Oman’s Raysut Cement, which has market presence in Tanzania, Somalia and Sudan and had been eyeing to acquire ARM Cement, wants to sell 60 percent stake to a Chinese firm, Zou Fengqi.

The Competition Authority of Kenya (CAK) has exempted the two from filing a notification before it, saying the transaction meets the threshold under the Competition (General) Rules, 2019.

Firms trading regionally are by law required to seek regulator’s approval for acquisitions and mergers

“The acquirer (Zou) had no assets or turnover for the preceding year, 2019, while the turnover of the target was Sh877.2 million,” said Wang’ombe Kariuki, CAK director-general.

Mr Wang’ombe added that Zou acquisition of a stake in the firm that has operations in East Africa will not affect competition negatively.

Competition (General) Rules, 2019 says that a merger where the combined turnover or assets of the parties involved is between Sh500 million and Sh1 billion is excluded from notification.

The entities are however required to apply to be considered for exclusion and get CAK response within 14 days.

Raysut set up a grinding unit in Somaliland and Mogadishu. It was also eying cement producers in Uganda and Djibouti.

The eastern Africa cement market holds huge potential amid ongoing mega infrastructure projects including expansion of sea ports and highways.

In Kenya for instance, cement consumption rose by 20 percent last year to hit 6.5 million tonnes, driven by both private and public sector construction activity that defied the Covid-19 pandemic.

Data from the Kenya National Bureau of Statistics shows that the increase was the biggest since 2014, at the start of modern railway construction.

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