The Competition Authority of Kenya has approved “unconditionally” the proposed acquisition of the floriculture business and certain assets of Oserian Development Company Limited.
This is by Bohemian Flowers Limited (Bohemian), a newly incorporated company that is however yet to commence commercial operations in Kenya.
Oserian is incorporated in Kenya and has for years been involved in the business of growing, processing, and exporting flowers to international markets especially Europe, Asia and the United States of America.
The proposed transaction involves the acquisition of the floriculture business and certain assets of Oserian by Bohemian.
In a statement yesterday, CAK said the transaction qualified as a merger within the meaning of Section 2 and 41 of the Competition Act No. 12 of 2010.
“The merging parties export nearly 100 per cent of their produce to Europe, Asia and America and, therefore, the authority did not consider their combined turnover to establish whether the transaction had met the thresholds for mandatory notification,”CAK notes.
In this case, the authority considered the value of the merging parties’ combined assets.
The parties’ combined assets for the preceding year was over Sh1 billion and, therefore, the transaction met the threshold for mandatory notification and full merger analysis as provided for in the competition (General) Rules, 2019.
The acquirer is a newly incorporated company in Kenya for the purposes of the transaction.
Its shareholders own Kongoni River Farm Limited which is involved in the cultivation of flowers for export.
When determining the relevant geographic market for analyzing the transaction, the authority took cognizance of the fact that production of flowers has two dimensions –where they are grown and sold.
Therefore, the relevant geographic market in terms of production was determined as Kenya, while in terms of sales, the relevant geographic market was determined to be Europe, the main export destination for Kenyan flowers.
Some of the main growers and exporters of flowers in Kenya are AA Growers, Afriflora, Aquila Flowers, Blacktulip, Flamingo Flowers Herbug Roses, Hola Roses, Isinya Roses, Panda Flowers and Batian Flowers, among others.
Post-merger, the proposed transaction is unlikely to raise competition concerns since the merged entity’s market share is low, CAK notes.
Additionally, the merged entity will face competition from firms growing flowers in Kenya as well as firms in other countries growing flowers for export.
During merger analysis, the authority also considers the impact that a proposed transaction will have on public interest.
The public interest concerns considerations include extent to which a proposed merger would impact employment opportunities, impact on the competitiveness of small and medium enterprises (SMEs) and impact on particular industries or sectors.
It also includes impact on the ability of national industries to compete in international markets.
The authority also considers the financial health of the undertakings and the extent to which the proposed transaction will impact the sustainability of the businesses.
“The acquirer has indicated they intend to absorb all the employees if the transaction is approved. Therefore, the authority is of the view that the proposed transaction will not have negative effects on employment,” CAK said.
It will salvage livelihoods for over 700 jobs and enhance Kenya’s competitiveness in the market for cut flowers, it added.