CMC take over bid by Dubai’s Al-Futtaim Group- via @FT

Posted on September 9, 2013

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Dubai group makes bid for Kenya car dealer

By Simeon Kerr in Dubai and Katrina Manson in Nairobi

Dubai’s Al-Futtaim Group is poised to launch a takeover offer for Kenya-based car dealership CMC Holdings as one of the Gulf’s largest conglomerates seeks to expand into sub-Saharan Africa.

The proposed deal, expected to be announced on Monday, underlines rising interest in sub-Saharan Africa from well-capitalised companies in the Gulf states, including Dubai.

The proposed deal, expected to be announced on Monday, underlines rising interest in sub-Saharan Africa from well-capitalised companies in the Gulf states, including Dubai.

Al-Futtaim said the potential takeover, which remains subject to regulatory approval, would be one of the largest foreign direct investments into the east African economy in recent years.

The Dubai family-owned group, which has interests spanning motors, hospitality and retail, plans on Monday to signal its intention to make a cash offer for 100 per cent of the company’s issued shares on the Nairobi Securities Exchange at 13 Kenyan shillings a share, or about $90m.

Al-Futtaim said the proposed takeover had received endorsement of 50.6 per cent of shareholders in CMC, which has operations across Kenya, Tanzania and Uganda.

The Dubai-based conglomerate, which holds lucrative distribution rights for Toyota and Honda in its home market, will help the struggling Nairobi-based automotive group expand its brands beyond its existing stable, which includes Volkswagen, Ford, Mazda and Suzuki.

CMC has historically won large government contracts to supply state vehicle fleets, but its fortunes have in recent years been plagued by a public boardroom clash.

Nairobi’s stock market regulators suspended share trading at CMC in September 2011 following an acrimonious shareholder battle over alleged fraud allegations in a case that is yet to be resolved.

Earlier this year, CMC lost its exclusive franchise for the Jaguar Land Rover dealership, worth nearly a quarter of sales last year.

“CMC has suffered a lot over the past few years from its shareholders’ disputes,” said Marwan Shehadeh, group director for corporate development at Al-Futtaim. “We hope through our prospective acquisition all stakeholders, especially its principals and employees, will be happy to see CMC coming back to its past glory as the leading automotive player in east Africa.”

Aly-Khan Satchu, a Kenya-based investment analyst, said the company’s best assets may be its land holdings in Nairobi’s industrial estate and at dealerships across the country.

“Clearly the car franchise took a fatal shot when Land Rover moved away from them – I think [the deal] is a big real estate play for some of its extremely valuable land bank,” he said.

Al-Futtaim, which controls 100 companies across 20 markets and traces its roots back to the 1930s, has been eyeing new markets amid a $1bn investment drive and wants to expand its foothold in what it describes as “the booming African economy”.

Dubai, which is witnessing a trade and tourism driven economic revival, is positioning itself as a hub for sub-Saharan Africa, as well as its established role as an entrepot hub serving the oil-rich Middle East.

The emirate’s financial centre, which grew 7 per cent in the first half, said this month it was benefiting from strong demand among Asia institutions, especially those from China, using Dubai as a springboard for operations across Africa.

Report Courtesy of the Financial Times

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