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Botswana retailer to buy Ukwala Supermarkets

What you need to know:

  • Choppies also plans to start operations in Namibia, Zambia and Tanzania in the next two months, targeting lower-to middle-income consumers, which will see it build from its initial 57 stores in Botswana.
  • The retail giant will take over Ukwala branches in Nairobi, Nakuru and Kisumu, giving it a bigger launchpad into Kenya’s lucrative retail business.
  • Chief executive Ramachandran Ottapathu, said the successful listing of Choppies on the JSE had given it the much-needed impetus to expand further into the East African market in the coming months.

Botswana-based retail chain Choppies will buy Ukwala Supermarkets, barely a month after announcing its intention to make an entry into the Kenyan market.

In a statement on its website and widely quoted by regional dailies, Choppies said it had entered into a conditional agreement with Ukwala Supermarkets that would see it take over 10 branches at Sh910 million.

The move comes months after the Competition Authority of Kenya (CAK) rejected a bid by Tuskys Supermarkets to take over the rival.

Choppies, which listed its 1.2 billion shares last Monday on the Johannesburg Stock Exchange, said the transaction was in line with its plans to have a footprint across the African continent where it intends to operate nearly 200 stores by December 2016 in at least six countries.

TARGETING GROWTH

It had listed Kenya as one of the markets it was targeting for growth.

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

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

Chief executive Ramachandran Ottapathu, said the successful listing of Choppies on the JSE had given it the much-needed impetus to expand further into the East African market in the coming months.

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

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

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

It is also listed on the primary segment on the Botswana Stock Exchange and is currently the top supermarket chain in that country.

SUCCESSFULLY BLOCKED TUSKYS

The competitions regulator successfully blocked a bid by Tuskys to take over Ukwala’s Nairobi branches, citing fears that 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 CAK about the takeover.