Botswana's retail giant Choppies to take over Ukwala Supermarkets

Ukwala Supermarket on Tom Mboya Street in Nairobi on October 29, 2013. Botswana-based retail chain Choppies will buy Ukwala Supermarket. PHOTO | SALATON NJAU | NATION MEDIA GROUP 

In Summary

• Choppies, which listed its 1.2 billion shares last Monday on the Johannesburg Stock Exchange, said that the transaction was in line with its plans to have a footprint across the African continent.
• The chain’s chief executive officer, Ramachandran Ottapathu, said the successful listing on JSE had given them the much-needed impetus to expand further into East African market.
• The acquisition is to be funded via debt and existing cash reserves is subject to final due diligence and inventory valuation.

By JAMES KARIUKI
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Kenya’s Ukwala Supermarket has a second suitor — Botswana’s Choppies — hardly year after the Competition Authority rejected Tuskys bid to take over the successful retail chain.

In a statement on its website, which has been widely quoted by regional dailies, Choppies said that it had entered into a conditional agreement with Ukwala Supermarkets that would see it take over ten supermarkets at a cost of Sh910 million.

Choppies, which listed its 1.2 billion shares last Monday on the Johannesburg Stock Exchange, said that the transaction was in line with its plans to have a footprint across the African continent.

The retailer operates 125 stores in its home market, South Africa and Zimbabwe. It intends to operate nearly 200 stores by December 2016 in at least six countries.

The Botswana-based retail giant will take over Ukwala branches in Nairobi, Nakuru and Kisumu, giving it a major launch pad into Kenya’s lucrative retail business.

The chain’s chief executive officer, Ramachandran Ottapathu, said the successful listing on JSE had given them the much-needed impetus to expand further into East African market in the coming months.

BIGGEST STORE

Last week, South Africa’s Massmart opened Kenya’s biggest store ‘Game’ in Nairobi, where it announced grand plans to take their rivals head-on with high quality products that are lowly priced.

Choppies also plans to start operations in Namibia, Zambia and Tanzania in the next two months targeting lower-to middle-income consumers, which would see it build from its initial 57 stores in Botswana.

The acquisition is to be funded via debt and existing cash reserves is subject to final due diligence and inventory valuation.

The news saw its shares up 3.09 per cent to Sh67, valuing the company at about Sh84 billion.

Mr Ottapathu attributed the aggressive drive to Choppies’ healthy financial status.

The supermarket is also listed on the primary segment of the Botswana Stock Exchange and it is currently the top supermarket chain there.

The Competitions Authority successfully blocked the Tuskys takeover of Ukwala’s Nairobi branches, citing fears it could dominate the scene to the detriment of other retail chains.

The two supermarkets were fined Sh5.3 million for failing to inform the authority over the takeover.