Corporate News
A Total Kenya service station in Ridgeways on Kiambu Road, Nairobi. PHOTO | MARTIN MUKANGU
By VICTOR JUMA, vjuma@ke.nationmedia.com
In Summary
- Job guarantees are part of the conditions the Competition Authority of Kenya (CAK) has attached to the buyout.
- The regulator is increasingly seeking to protect jobs for a few years at target companies in recent acquisitions.
- Total is the latest acquirer to face job cuts constraints from the regulator which in November ordered I&M to retain all the 108 employees of Giro post-acquisition for an unspecified period.
French oil multinational Total Outre-Mer has been
ordered to retain employees of fuel importer Gulf African Petroleum
Corporation –which it is set to acquire— for between one and two years
from completion of the ongoing takeover of the business.
The job guarantees are part of the conditions the Competition Authority of Kenya (CAK) has attached to the buyout.
Acquirers often cut jobs soon after taking control
of companies for various reasons including to reduce expenses and
increase efficiency.
The regulator is increasingly seeking to protect
jobs for a few years at target companies in recent acquisitions
including at Giro Bank, which was acquired by I&M Holdings.
Total has been ordered to keep employees on
short-term contracts for at least one year and those on long-term
employment for a minimum of two years, according to a CAK notice in the
latest Kenya Gazette.
“The merging parties shall not terminate any of the
current short-term employment contracts of Gulf African Petroleum
Corporation employees whose contract of employment has a remaining
period of validity of less than two years for a period twelve months
from the completion date,” reads part of the notice.
“The merging parties shall not terminate any
permanent and pensionable long-term employment contracts … before the
end of the 24-month period from the completion date.”
The regulator says Total may also extend short-term contracts that are soon expiring to make them last at least a year from the date the deal is sealed.
The regulator says Total may also extend short-term contracts that are soon expiring to make them last at least a year from the date the deal is sealed.
Gapco employees panicked when acquisition talks
between the two companies started, rushing to court to stop the deal
until they got “acceptable” terms if they were to be fired as a result
of the transaction.
The workers accused Gapco of secretly moving to
transfer control of the company to Total to their disadvantage and
sought a Sh800 million bonus to be shared amongst them based on a
formula they settled on.
The claim was pegged on allegations that local
employees have historically been paid lower bonuses than expatriates
working at the company.
They also argued that majority of them, 32 of 38,
were on two-year contracts that were not guaranteed to be renewed once
they are transferred to the new employer.
Firms making acquisitions in their industry have
often argued that the job cuts are done to eliminate duplication of
services, with some departments also closed if they are not important to
the acquirer.
Total is a regional oil marketer, selling petroleum
products directly to airlines and diesel power plants besides motorists
through its branded fuel stations.
Gapco is also a regional petroleum importer and
runs storage facilities that are leased to third parties. The French
multinational is set to acquire a 100 per cent stake in Gapco for cash
from its minority investors and India’s Reliance Industries which holds a
76 per cent equity in the company.
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