The Competition Authority of Kenya (CAK) has given Car&General (Trading) Limited approval to fully acquire Cummins C&G Holdings, after meeting regulatory requirements.
Cummins C&G Holdings main commercial activities are the distribution of power generators and diesel engines, maintenance of power equipment, and sale of filtration equipment and coolants. It is incorporated in Mauritius.
Car and General (Trading) Limited, a subsidiary of Nairobi Securities Exchange (NSE) listed Car & General (Kenya) Plc is involved in supply, distributions 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.
The acquisition comes at a time when Kenya’s power generator market is expected to expand following different projects across the country.
Over the next three years, Special Economic Zones (SEZs) is expected to be established increasing demand for power generators, this will be besides government-backed infrastructure projects, including technology cities and expansion of roads.
Additionally, the growing telcom sector, rising manufacturing industries as well as expansion of business parks is expected to further spur market for diesel generators.
“This approval has been granted based on the finding that the transaction is unlikely to negatively impact competition in the market for power generators and engines and the market for filtration equipment and coolants,” said CAK in a statement.
“Additionally, the transaction will not elicit negative public interest concerns, the two key considerations during merger analysis.”
The proposed transaction involves the acquisition of the entire share capital of Cummins C&G by Car & General. The transaction, therefore, qualified as a merger pursuant to section 2 and 41 of the Competition Act, No. 12 of 2010. The Act stipulates that a merger, or takeover, may occur when an undertaking directly or indirectly acquires control over another business within Kenya. This may happen through, among others, purchase/lease of shares, exchange of shares, vertical integration.
Further, merging parties whose combined turnover or assets, whichever is higher, is over Sh1 Billion are required to seek approval from the Authority before implementing the proposed transaction. CAK noted that the transaction between Cummins C&G and Car & General met this threshold for mandatory notification and full analysis as provided in the Competition (General) Rules, 2019.
One criteria for assessing a merger’s impact on competition is the post-merger market share of the undertakings involved in the transaction. With regard to the proposed merger, the transaction is not expected to raise competition concern post-merger since it is an increase of shareholding by the acquirer in the target. Therefore, the market structure and concentration will be unaffected.
“Premised on this, the proposed transaction is unlikely to lead to a substantial lessening or prevention of competition in the market for power generators and engines and the market for filtration in Kenya.”
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