Dineo Faku
BOTSWANA multinational grocery retailer, Choppies Enterprises, yesterday announced its plan to buy 10 stores in Kenya for $10 million (R121m) a week after listing on the JSE.
Chappies, which operates 125 retail outlets including 72 stores in Botswana, 35 in South Africa and 18 in Zimbabwe said it had entered into an agreement with Ukwala Supermarkets to purchase its assets and business name.
Ukwala is a recognised brand in the Kenyan market and the stores will trade as Choppies Ukwala supermarkets.
“The purchase consideration will be funded with debt and from existing cash resources,” the company said.
The deal is in line with Choppies’ growth strategy of expanding into new markets in sub-Saharan Africa and its target of operating over 200 stores in six African countries by December 2016.
Choppies has previously said it was eyeing opportunities in Zambia, Tanzania, Kenya and Namibia. New stores in Zambia and Tanzania are on the cards by the end of next month.
Footprint
“The transaction provides the company with an immediate footprint of established stores and a platform from which to grow in Kenya,” the company added.
Three of the supermarkets are located in the country’s capital Nairobi, two in Nakuru and five in the port city of Kisumu, the third largest city in Kenya.
As part of the deal, Choppies will operate with a 25 percent local partner in Kenya in terms of the joint-venture agreement with the promoters of Export Trading Group.
Export Trading Group is a leading agricultural commodities trading and logistics business, long-established in the region.
The supermarkets will be acquired by Choppies Supermarket Kenya, in which the company holds a 75 percent interest.
The purchase consideration represents less than 5 percent of Choppies’ market capitalisation. The deal is subject to regulatory approvals.
Choppies targets mainly lower to middle-income consumers.
Its supermarket retail offering mainly consists of Fast Moving Consumer Goods products which include international food brand and Choppies’ own private label products.
There is a strong focus on service offerings ranging from fresh fruit and vegetables, butchery, bakery to take-away.
Choppies opened its first store in 1986 in Lobatse, Botswana.
The stock yesterday ended unchanged on the JSE at R5.50.