The Competition Authority of Kenya has approved the proposed acquisition of bottle maker Aquaplast Limited by Aquapani Limited, a subsidiary of Menengai Group Limited. The proposed transaction involves the acquisition of the entire issued share capital in water bottling firm Aquamist Ltd.
Menengai formed Aquapani as a wholly-owned subsidiary mainly for this deal, but other entities controlled by the shareholders of the acquirer are engaged in various commercial activities.
The proposed transaction, therefore, qualified as a merger within the meaning of Section 2 and 41 of the Competition Act No.12 of 2010.
“Premised on the fact that the transaction is unlikely to raise negative competition or public interest concerns, the Authority approved the proposed acquisition of 100 per cent of the issued shares in Aquamist Limited by Aquapani Limited,” CAK noted.
The statement by CAK noted that the two groups perform different activities that do not overlap. Thus, the relevant product market was determined as the market for plastic bottles.
The Authority is of the view that the merger is unlikely to raise competition concerns. Aquaplast currently operates at 30% capacity utilization and can scale up its output and offer competitive pressure to other players.
The regulatory body further stated that Aquaplast is a small player based on the fact that it serves only one customer and the acquirer does not operate in the market presently.
However, it added that “ the firm will face competition from well-established players with strong distribution networks in the market. 15. Additionally, the transaction is unlikely to lead to any negative public interest concerns.”
