UGANDA – Uganda’s leading milk processing company, renowned for its Lato brand, has gained approval to acquire a 100% stake in Highland Creamers & Food Limited, a Kenyan firm known for its Farmily Milk brand.
The announcement was made by the Comesa Competition Commission on March 11, after it applied to acquire a 100% stake in the milk processor last year.
marked a pivotal moment for Maziwa, the non-operating holding company incorporated in Mauritius, as it moves to strengthen its presence in the East African dairy market.
According to the commission, the approval came after the two parties met acquisition guidelines considering submissions from the Kenyan competition authority, which certified the transaction as not raising any concern.
In addition, the commission emphasized that the merger is unlikely to impede competition in the Common Market or contravene public interest.
It highlighted the presence of numerous competitors in the market, ensuring continued competition even after the transaction.
“The CID (Committee Responsible for Initial Determinations) determined that the merger is not likely to substantially prevent or lessen competition in the Common Market or a substantial part of it, nor will it be contrary to the public interest.”
The transaction now gives Maziwa, a company incorporated in Mauritius and operating in the country through its subsidiary Pearl Dairy Farms Limited in Uganda, a major boost to the hurdles it has previously faced in gaining access to the Kenyan market.
Maziwa has been reliant on the Kisii firm to facilitate the sale of its products in Western Kenya.
With the acquisition, Maziwa aims to establish a manufacturing base in Kenya, enabling quicker access to the market and enhancing its operational efficiency.
While the specific financial details of the deal remain undisclosed, Pearl Dairy Farms Limited intends to leverage the acquisition to expand its operations.
Last year, in April, Pearl tapped a US$35 million (Ksh5.36 billion) loan from the International Finance Corporation, promising to use US$21 million (Ksh3.22 billion) in upgrading and increasing the capacity of its powder milk plant in Uganda and acquiring a packing plant in Kenya.
In addition, the Commission said it also considered submissions from the national competition authorities of Egypt, Kenya, and Malawi, all of which did not raise any concerns about the transaction.
“Further, it was evident from the parties’ submission and the submissions by the Competition Authority of Kenya that the market was fragmented with numerous competitors who would continue to exert competitive pressure on the merged entity.”
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