S. Africa retail chain caught in Naivas ownership battle

A South Africa retail chain is caught up in a succession war as it seeks to buy a majority stake in Kenya’s fourth largest supermarket.

Massmart Limited, Africa’s third largest distributor of consumer goods, wants to buy a 51 per cent stake in Naivas Supermarket.

However, Newton Kagiri Mukuha, the elder son of the late Peter Mukuha Kago, the founder of Naivas, has moved to court opposing the sale.

He says his siblings want to disinherit him by excluding him from discussions on the sale of the firm.

“My client’s interests are protected by Article 27 that explicitly prohibits direct and indirect discrimination. He is the first born son of Mr Mukuha and cannot be excluded from gains made by his father when he was alive,” Mr Evans Ondieki, representing Mr Mukuha, told the High Court in Nakuru Wednesday.

“… Mr Kagiri stands to suffer since his siblings have entered into an agreement to cede majority stake in Naivas Supermarket Limited to a South African company while allocating themselves the remaining shares.”

Naivas is Kenya’s fourth largest retail chain behind Nakumatt, Tuskys and Uchumi. It is the second retail chain to fall into a succession war after Tuskys, whose dispute is still pending in court.

Massmart has also announced a plan to set up locally by 2014 when the Thika Mall is completed.

In papers filed in court, Mr Mukuha says he contributed Sh20,000 in April, 1990 when his father came up with the idea of establishing the Sh100,000 business during a get-together at their home in Cherang’any, Kitale.

The business that started trading as Rongai Self Service Store on June 1, 1990 grew into a large supermarket store expanding to Naivasha. It later changed its brand name to Naivas, which currently has 26 branches.

Mr Mukuha claims his two brothers, Mr Simon Gachwe and David Kimani, fraudulently renamed the business and shared its stake on a 50-50 basis.

But lawyer Francis Mwangi disputed the claim saying Naivas Limited is a private company incorporated legally with a list of directors and Mr Kagiri is not one of them. He says Mr Kagiri is a stranger to Naivas.

“Naivas is not a family business as claimed by the objector but it is a limited liability company with shareholders who make decisions on its behalf. It is not and has never been part of the estate of the late Mr Kago,” he said.

Sworn affidavit

In papers produced in court and supported by an affidavit sworn by Naivas chairman Simon Gachwe, its directors are Mr Gachwe (12,500 shares-25 per cent), Kimani (12,500), Peter Mukuha (10,000), Grace Wambui (7,500) and Linet Wairimu (7,500).

Information contained in documents from the Registrar of Companies and dated February 14 last year, hardly mentions Mr Mukuha.

Mr Mwangi opposed the application saying a “stranger” should not block operations of a limited liability that “he is not, and has never been, part of”.

High Court judge, Justice Anyara Emukule ruled that Mr Mukuha had properly moved to court seeking a piece of his father’s estate and gave directors of the supermarket chain 10 days to respond to the application.