Nakumatt set to acquire Shoprite stores in Tanzania

Kenya’s largest retail chain Nakumatt is set to acquire three stores belonging to South Africa’s Shoprite in Tanzania in a multi-billion-shilling deal that is expected to be completed by March next year.

The acquisition gives Nakumatt a bigger presence in Tanzania where it debuted in December 2011 with the 34,000-square feet Nakumatt Moshi outlet.

The deal involves the takeover of three Shoprite outlets — one in Arusha and two in Dar es Salam — and is valued at Ksh4 billion (about Sh76 billion).

“We have been informed of the said takeover by Nakumatt and the whole deal is set to be concluded by March next year,” a senior Shoprite manager in Arusha told The Citizen’s sister paper, Business Daily, on the phone.

But Nakumatt Holdings managing director Atul Shah sought to play down reports of a deal involving the two retail chains.

“There is no news on this, we will let you know if anything like this develops,” Mr Shah said in an email response to inquiries by the Business Daily. The impending acquisition marks the latest phase of cross-border expansion by a Kenyan retailer.

Like Nakumatt, Kenya’s second-largest retail chain Uchumi Supermarkets has a regional presence with outlets in Uganda and Tanzania besides cross-listing at the Kigali Securities Exchange in Rwanda.

It is believed that Tanzania’s regulatory environment has changed. The country wants Shoprite to support local producers by buying from them as opposed to the current situation where majority of products sold in the retail chain are imported from South Africa.

Should the deal materialize, Nakumatt will have increased its Tanzanian presence to four outlets.

Shoprite Group of Companies is one of Africa’s largest food retailers. It operates 1,334 corporate and 406 franchise outlets in 17 countries across the continent and the Indian Ocean Islands.

Shoprite was previously the biggest retailer in Tanzania ahead of rivals such as Shreejis Supermarket, Shoppers Supermarket and the high-end Village Supermarkets.

Nakumatt, which runs 35 stores in East Africa including Rwanda and Uganda, has crafted an ambitious expansion plan that should see it venture into more African markets in the medium term. Shoprite opened its first shop in Tanzania in 2001.

Shoprite Group of Companies is one of Africa’s largest food retailers. It operates 1,334 corporate and 406 franchise outlets in 17 countries across the continent and the Indian Ocean Islands.

Like Nakumatt, Kenya’s second-largest retail chain Uchumi has a regional presence with outlets in Uganda and Tanzania besides cross-listing at the Kigali Securities Exchange in Rwanda.

Nakumatt’s biggest rival Uchumi Supermarkets has also embarked on a regional expansion drive seeking to diversify away from the domestic market.

Uchumi, which has 30 outlets in East Africa, plans to open eight more branches in the next six months. Of the new branches, four will be in Kenya, one in Uganda, and three in Tanzania.

Nakumatt, which runs 35 stores in East Africa including Rwanda and Uganda, has crafted an ambitious expansion plan that should see it venture into more African markets in the medium term.

Shoprite’s decision to sell its Tanzania business to Nakumatt bucks the trend where more of its homegrown peers are entering East Africa, attracted by growing disposable incomes.

The target markets under the plan that should see the company transform into a Pan African retailer include Burundi, Zambia, South Sudan, DRC, Nigeria, Botswana and Malawi.

The buyout of Shoprite in Tanzania will be Nakumatt’s latest acquisition after it took over four Woolmatt Supermarkets outlets in Nairobi in March 2010 for Ksh400 million (about Tsh7.6 billion) .
Source: The Citizen, reported from Dar es Salaam, Tanzania
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