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Nakumatt, Tuskys Make Fresh Bid For Partnership

Tuskys and Nakumatt have submitted a fresh application to the competition regulator asking to be allowed to partner in a rescue plan for the troubled retailer, Business Daily reports.

The new application asks the Competition Authority of Kenya (CAK) to exempt a management contract between the two firms, rather than the merger cited in an earlier submission.

The regulator had rejected the merger filing in December last year, saying that the two companies had not filed the proper exemption application.

The CAK director general Wang’ombe Kariuki declined to divulge details of the new application, saying the Authority could only reveal these in a Gazette notice. Tuskys managing director, Dan Githua, said the company could not comment on the matter.

The retailer has stepped up to help rescue Nakumatt, which is facing an uncertain future weighed down by heavy debt.

Tuskys has said that it would inject Sh650 million into the company for rental dues and salaries while committing to provide Nakumatt with stock of up to Sh3 billion.

According to court filings made last year, the two companies are pursuing a deal in which Tuskys will provide management services, a loan and debt guarantees to Nakumatt.

Since the two companies are competitors, such an agreement would be in contravention of Section 21 of the Competition Act. The deal has the potential to distort the market since the two companies would become privy to each other’s strategies and cease to be competitors in the strict sense of the word.

Terming the deal a “merger”, the two retailers last year submitted an application for the CAK to exempt it from the law.

However, the regulator rejected this application saying that the two companies had sought exemption under the wrong clause of the competition law.

Since Nakumatt ownership would not change as a result of the agreement, CAK said, the deal could not be termed a merger.

The regulator asked them to file afresh.

Nakumatt this week got reprieve after the High Court granted an application to appoint an administrator to run the retailer, rather than liquidating it as some creditors had demanded.

 

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