Kenya pushes EA takeover deals to Sh86.2bn high

Burbidge Capital CEO Edward Burbidge (left) with Atlas Development & Support Services CEO Carl Esprey at the NSE last December. PHOTO | SALATON NJAU 

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com

In Summary

• Burbidge Capital data shows the number of M&A deals in 2014 stood at 48, with the value of the deals at Sh86.2 billion ($947 million). 
• In 2013, there were 31 such deals valued at Sh27 billion ($300.6 million).
• Kenya accounted for 33 of the 48 published deals last year, with a total disclosed value of Sh46.2 billion.

The value of mergers and acquisitions (M&A) in East Africa went up by 215 per cent last year compared to 2013, with Kenya accounting for most of the deals.

Data on disclosed deals compiled by Burbidge Capital shows the number of M&A deals in 2014 stood at 48, with the value of the deals at Sh86.2 billion ($947 million).  In 2013, there were 31 such deals valued at Sh27 billion ($300.6 million).

However, the total value of the deals is much higher with the amounts involved in 20 of the 48 deals not yet disclosed by the parties involved.

The insurance sector saw the most activity with seven deals concluded, followed by manufacturing with six deals.

The hospitality sector saw five deals in business hotels, food and beverage, while the banking and agribusiness recorded four deals apiece.

“We expect the insurance sector, which saw the 2014 entry of global insurers Swiss Re and Prudential Plc in Kenya, to maintain a leading position in 2015 due to the imminent high growth potential of the industry as well as the higher capital demands,” said Burbidge Capital chief executive Edward Burbidge.

This year has already seen a major deal concluded with $253 million (Sh23 billion) spent by Old Mutual to take up a 60.66 per cent stake in insurer UAP Holdings.

Kenya accounted for 33 of the 48 published deals last year, with a total disclosed value of Sh46.2 billion.

The biggest deal in Kenya of disclosed value was the sale by Essar Capital of its Kenyan telecoms business (yuMobile) to rivals Bharti Airtel and Safaricom for about $120 million (Sh10.9 billion).

READ: Safaricom 4G rollout on course after yu assets transfer

Under the agreements, Safaricom took over yuMobile network, IT and office infrastructure, while Bharti Airtel acquired the firm’s 2.5 million subscribers.

In other big Kenyan deals, Dubai-based conglomerate Al-Futtaim completed the takeover of NSE-listed auto dealer CMC for $88.3 million (Sh8 billion) while Old Mutual took a 67 per cent stake in Faulu Kenya for $46 million (Sh4 billion).

Another big deal whose value was, however, not disclosed was the purchase by French food giant Danone of a 40 per cent stake in Kenya’s biggest dairy firm Brookside Dairy.

READ: French group Danone buys 40pc stake in Brookside

The single-largest disclosed amount for regional acquisition last year was in Tanzania — the $242 million (Sh22 billion) paid by Johannesburg Stock Exchange-listed Vodacom Group to Cavalry Holdings Ltd for an additional 17.2 per cent stake in its subsidiary Vodacom Tanzania.