Car & General firm (C&G), the diversified trading company, is looking to fully regain ownership of Cummins C&G Limited (Cummins CG), a diesel engine manufacturer. The transaction is subject to regulatory clearance.
The Nairobi Securities Exchange-listed firm has made a share purchase agreement with Cummins BV (CMI Africa Holdings BV) to acquire the remaining 50% stake of the distributorship business, thereby regaining complete ownership of the business.
In 2017, Car & General sold its stake in Cummins CG to Cummins Inc, the US-based franchise owner, for KES 412 million, which led to the formation of the joint venture. During that period, C&G had expressed concern about the rising competition from other equipment manufacturers and dealers.
In 2006, the firm, which operates in poultry farming and real estate, was selected to distribute Cummins’ diesel engines, turbochargers, alternators, and generators. Now, the new proposal from C&G aims to reclaim exclusive ownership of the distributorship for these engines and generators.
Car & General warned the public that while business structure changes are expected, their dedication to serving customers in the region will remain unchanged.
C&G entered the joint venture with Cummins BV in 2017, and the joint venture has succeeded. To continue to grow and improve customer support, the strategic decision being announced was made jointly by both partners.
Car & General
The parties expect the approval of the transaction to take three months, after which Cummins CG will operate as a wholly-owned subsidiary of C&G and serve as an authorized Cummins distributor in the Eastern African region.
On Friday, the firm’s share price closed at KES 36, a 1.6 per cent decrease from the previous day’s closing price of KES 36.60.
The company has been expanding in various areas, including real estate, consumer credit, and the production of motorcycles, tuk-tuks, and helmets. As part of its diversification plan, it opened a helmet manufacturing plant last year.
In the year ending September 2022, the company hired 711 employees, which is significant in an economy where most businesses have been reducing their workforce due to slow sales growth. However, due to higher debt service costs, the company’s net profit for the entire year ended September 2022 decreased by 23 per cent to KES 679.46 million.
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