Nakumatt to finalise Shoprite deal by April

Shoppers at Nakumatt supermarket. The retail chain runs nearly 50 stores in East Africa. Photo/FILE 

By SIMON CIURI

Posted  Thursday, January 9   2014 at  19:59

In Summary

• It is estimated that the deal, which will see the Kenyan retailer acquire two Dar es Salaam- based Shoprite stores and one outlet in Arusha, will cost Nakumatt Sh4 billion.
• Nakumatt will absorb all Shoprite staff in Tanzania to save on hiring and training costs for new employees.
• Shoprite was one of the biggest retailers in Tanzania ahead of rivals such as Shreejis Supermarket, Shoppers Supermarket and the high-end Village Supermarkets. It is estimated to have about 500 employees.

Nakumatt Holdings is set to complete a buy-out of three Tanzanian outlets of South African retail chain Shoprite in the next four months, managing director Atul Shah has said.

It is estimated that the deal, which will see the Kenyan retailer acquire two Dar es Salaam- based Shoprite stores and one outlet in Arusha, will cost Nakumatt Sh4 billion.

“We have almost finalised the process of acquiring Shoprite and (will) hopefully start operations in three to four months if all goes as planned,’’ said Mr Shah.

He was speaking after receiving Sh600 million payment from Mayfair Insurance Company as compensation for losses suffered in the September terrorist attack at its Westgate Mall branch.

This second payout raises the total compensation by Mayfair to Sh1 billion out of an estimated total loss of Sh2 billion.

ALSO READ: Westgate mall insurer faces Sh6.6bn compensation bill

Nakumatt will absorb all Shoprite staff in Tanzania to save on hiring and training costs for new employees.

Shoprite was one of the biggest retailers in Tanzania ahead of rivals such as Shreejis Supermarket, Shoppers Supermarket and the high-end Village Supermarkets. It is estimated to have about 500 employees.

‘‘We don’t want job losses and recruiting new staff will not be of any benefit in terms of doing business,’’ said Mr Shah.

The acquisition of Shoprite outlets is set to deepen Nakumatt’s presence in Tanzania where it debuted with a branch in Moshi in 2011.

Shoprite opened its first shop in Tanzania in 2001 and its exit comes a few months after the Tanzanian government warned it against importing the bulk of its products from South Africa.

Shoprite is said to have been importing up to 80 per cent of its products from South Africa, which did not sit well with the Tanzanian government.

Nakumatt is said to have made plans to buy its products from both Tanzanian manufacturers and Kenyan distributors based in Tanzania.

READ: Nakumatt deepens Tanzania presence with Shoprite buyout

Both Kenya and Tanzania belong to the East Africa Community (EAC) common market which has signed a protocol for free flow of goods, capital and labour.