Kenya’s competition regulator clears Raysut Cement’s 60% stake sale to Chinese firm Zou Fengqi

KENYA – Omani cement manufacturer Raysut Cement, which has market presence in Tanzania, Somalia and Sudan and had been eyeing to acquire ARM Cement, wants to sell 60 percent stake to a Chinese firm, Zou Fengqi.

The Competition Authority of Kenya (CAK) has exempted the two from filing a notification before it, saying the transaction meets the threshold under the Competition (General) Rules, 2019.

Firms trading regionally are by Kenyan law required to seek regulator’s approval for acquisitions and mergers

“The acquirer (Zou) had no assets or turnover for the preceding year, 2019, while the turnover of the target was US$8.2 million,” said Wang’ombe Kariuki, CAK director-general.

Mr Wang’ombe added that Zou acquisition of a stake in the firm that has operations in East Africa will not affect competition negatively.

Competition (General) Rules, 2019 says that a merger where the combined turnover or assets of the parties involved is between US$4.7 million and US$9.3 million is excluded from notification.

The entities are however required to apply to be considered for exclusion and get CAK response within 14 days.

Raysut set up a grinding unit in Somaliland and Mogadishu. It was also eying cement producers in Uganda and Djibouti.

“The acquirer (Zou) had no assets or turnover for the preceding year, 2019, while the turnover of the target was US$8.2 million”

Wang’ombe Kariuki – Director -General, Competition Authority of Kenya

The Eastern Africa cement market holds huge potential amid ongoing mega infrastructure projects including expansion of sea ports and highways.

In Kenya for instance, cement consumption rose by 20 percent last year to hit 6.5 million tons, driven by both private and public sector construction activity that defied the Covid-19 pandemic.

Data from the Kenya National Bureau of Statistics shows that the increase was the biggest since 2014, at the start of modern railway construction.

Raysut Cement is an Omani cement manufacturer and is the largest cement producer in the sultanate.

According to Global Cement Directory 2018, the company is the 92nd largest cement producer in the world based on integrated production capacity.

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