COMPETITION AUTHORITY OF KENYA CAK APPROVES PROPOSED ACQUISITION OF MONITORY CONTROL OF AFRICAN ORIGINALS LIMITED.

BY VICTORIA MOVINE

The Competition Authority of Kenya has approved the proposed acquisition of minority control of African Originals Limited, the ultimate owners of the Kenyan Originals (KO) brand of alcoholic and non-alcoholic beverages, by Phoenix Beverages Limited unconditionally.

The approval was granted after an investigation was carried out focusing on key considerations such as market for manufacture, processing, distribution, and sale of alcoholic ciders, alcoholic spirits and Non-Alcoholic Ready-To-Drink (NARTD) beverages, and eliciting of negative public interest concerns, proved that the transaction is unlikely to negatively impact their competition in the market not elicit negative public interest concerns. 

Phoenix Beverages Limited (PBL)— a limited liability company incorporated in Mauritius, deals with the manufacture, processing, distribution, and sale of alcoholic and non'-alcoholic beverages and also directly and indirectly controls several undertakings with operations in Kenya through IBL including it's 

affiliate Naivas Limited.

The transaction, was approved as a merger within the meaning of Section 2 and 41 of the Competition Act No. 12 of 2010 which states that a merger, or takeover, may occur when an undertaking directly or indirectly acquires control over another business within Kenya or purchase/lease of shares, exchange of shares, or vertical integration.

Characterized by a mix of multinational corporations and local companies, NARTD market is highly diverse, with various products catering to different consumer preferences. As a shareholder of NARTDs in Kenya, the CocaCola Company has the largest market share accounting for approximately 70% of the market followed by Kevian Kenya (4.76%); Excel Chemicals (2.29%); Del Monte (1.42%); Highlands (1.59%); Suntory (0.48%) and others (19.46%) including the target’s brands.

To approve the qualification of the proposed transaction, the authority considered the impact of the transaction on public interests, which were derived from the competition Act. The considerations made were: extent to which a proposed merger would impact employment opportunities; impact on competitiveness of SMEs; impact on particular industries/sectors; and impact on the ability of national industries to compete in international markets.

Based on the above, the Authority approved the proposed acquisition of minority control of African Originals Limited by Phoenix Beverages Limited since the transaction will neither elicit negative public interest concerns nor cause loss of employment.