The Competition Authority of Kenya (CAK) has approved the KSh 1 billion acquisition deal between Toyota-owned CFAO Motors and Thika-based Kenya Vehicle Manufacturers (KVM) Limited, concluding that the agreement will not impact fair competition.
- CFAO Motors, now CFAO Mobility, will take control of a 98% ownership stake in KVM, as well as the responsibility to settle outstanding debts and rejuvenate operations.
- The government initially owned 35% of KVM, while CFAO Motors and CMC Holdings each owned 32.5% of the company.
- The buyout of shares allows CFAO Motors to assemble and produce its vehicles locally, cutting out its reliance on assemblers like Simba Corps Associated Vehicle Assemblers (AVA) in Mombasa.
“The rationale for the transaction, as provided by the parties, is to enable the target to settle its outstanding debts and revamp operations, including the assembly business,” the Authority stated.
The CAK also outlined the market share of assembly lines in Kenya, with Simba Corps AVA leading with 41.1%, followed by Isuzu East Africa at 40.1%. KVM has about 13% of the market share but the capital infusion by CFAO Motors is projected to boost its competitiveness. KVM’s production capacity was slowed down by financial constraints and revenue shortfalls.
The deal was set in motion in October last year, during the G7 session of Trade Ministers convened in Osaka, when Toyota agreed to work with the government to revive motor manufacturing.
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