July 25, 2023
Car&General (Trading) Limited has received approval from the Competition Authority of Kenya (CAK) to fully acquire Cummins C&G Holdings, meeting all the necessary regulatory requirements. Cummins C&G Holdings, based in Mauritius, is primarily involved in distributing power generators and diesel engines, maintaining power equipment, and selling filtration equipment and coolants. On the other hand, Car and General (Trading) Limited, a subsidiary of Car & General (Kenya) Plc listed on the Nairobi Securities Exchange (NSE), deals with the supply, distribution, and maintenance of power equipment, household goods, agricultural tractors and implements, marine engines, motorcycles and three-wheeler vehicles, commercial laundry equipment, commercial engines, forklifts, excavators, asset financing, and property holding.
This acquisition comes at a time when Kenya’s power generator market is anticipated to grow due to various projects across the country. The establishment of Special Economic Zones (SEZs) and government-backed infrastructure projects, including technology cities and road expansions, is expected to increase the demand for power generators. The telecom sector’s growth, rising manufacturing industries, and business park expansions are also likely to further boost the market for diesel generators.
The CAK stated that the acquisition was approved because it is not expected to negatively impact competition in the markets for power generators, engines, filtration equipment, and coolants. Furthermore, it does not raise any public interest concerns. The proposed transaction involves Car & General acquiring the entire share capital of Cummins C&G, qualifying as a merger under the Competition Act. Transactions with combined turnovers or assets exceeding Sh1 Billion in Kenya require approval from the Authority before implementation.
In assessing the merger’s impact on competition, one criterion is the post-merger market share of the involved undertakings. In this case, since the transaction only involves an increase in shareholding by the acquirer in the target company, it is not expected to raise any competition concerns or affect the market structure and concentration.
Based on these considerations, the proposed acquisition is not likely to lead to a significant reduction or prevention of competition in the power generators, engines, filtration equipment, and coolants markets in Kenya.
photo source: google
Delino Gayweh
Serrari Financial Analyst
