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MERGERS AND ACQUISITIONS
• Mergers are like marriages. They are the bringing together of two
individuals. If you wouldn't marry someone for the 'operational
efficiencies' they offer in the running of a household, then why would
you combine two companies with unique cultures and identities for
that reason? Simon Sinek
•
Reasonable mergers generate substantial synergies, so that provides
for earnings and cash-flow growth even if it doesn't provide for
revenue growth, and I think that's a big driver.
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COMPANY X
• Private Co. Limited by shares
• 3 Directors/shareholders
• 1 million shares- Ksh 1each
• Export and Import Hardware and Agro-
products
• Yearly Net profit for FY 2019 1.2 million
• Private Co. Limited by shares
• 2 Directors
• 3 shareholders
• 100,000 shares- Ksh 5 each
• Fintech combined with distribution,
marketing and leasing farm machinery
• Yearly Net profit for FY 2019 Ksh
800,000
COMPANY Y
COMPANY XY
• Incorporation of new company
• Company X and Company Y wound up
• New articles of association
• New shareholding structure
• 6 Directors
• New business structure of the company
• Combined assets
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COMPANY X
• Private Co. Limited by shares
• 3 Directors/shareholders
• 1 million shares- Ksh 1 each
• Export and Import Hardware and Agro-
products
• Yearly Net profit for FY 2019 1.2 million
• Private Co. Limited by shares
• 2 Directors
• 3 shareholders
• 100,000 shares- Ksh 5 each
• Fintech combined with distribution,
marketing and leasing farm machinery
• Yearly Net profit for FY 2019 Ksh
800,000
COMPANY Y
• Shareholding redistributed based on the value of shares held by
shareholders
• New Board of Directors with representation from X & Y
• Company X retains its brand/identity
• Company Y is wound up but gains in shareholding in the merged
entity
• Company Y retains its business structure and but is answerable
to the board
• E.g KCB and National bank subsidiary
• Meridian group of hospitals Africa Group holdings
COMPANY X
Why merger or acquisition
• National bank in distress and required capitalization and shopping for
an investor
• KCB needed to invest ,expand footprint and size
• NIC and CBA – Equal size , growth ,non needs capital more than the
other , merge, consolidate and utilize the economies of scale for
growth. Now 3rd largest bank in assets.
• Majority control – 50 percent plus becomes subsidiary
• Rubis Kenol Kobil- prime region to set footprint 100 % acquisition
enabling Rubis to have a business without green field entity,Gulf
energy and are the largest player in the downstream oil sector.
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Considerations
Commercial
• Valuation of the entity /willingness to pay
• Returns on investment
Due diligence concerns
• Potential liability
• Potential exposures –target paying taxes,legal suits
Post merger integration
• Culture of acquirer /target
• Employee value
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LEGALAND INSTITUTIONAL FRAMEWORK FOR MERGERS AND TAKE-
OVERS
• Capital Markets Act
• Capital Markets (Takeovers & Mergers) Regulations, 2002
• Competition Act
• Companies Act 2015.
• Capital Markets Authority
• Competition Authority
• Competition Tribunal
• Capital Markets Tribunal.
• The Capital Markets Tribunal is established under section 35A of the Act. It hears appeals
from persons aggrieved by directions given by the CMA on any matter listed under section
35 (1) of the Capital Markets Act.
• The Competition Tribunal is established under section 71 of the Competition Act and has
power to review the decisions of the Competition Authority, including those made under
section 46(6) of the Competition Act in relation to mergers.
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M &A
• Other regulatory bodies
East African Community Competition Authority
• The East African Community Competition Authority (EACA) is an institution of the
East African Community (EAC) established by Section 37 of the EAC Competition
Act. Article 75 (1) (i) of the Treaty for the Establishment of the East African
Community provides that Partner States agree to establish a Customs Union details of
which shall be contained in a Protocol which shall, inter alia, include competition.
COMESA Competition Commission
• Kenya is also a member of the Common Market for Eastern and Central Africa
(COMESA). In 2004, the Council of Ministers invoked the provisions of Article 55(3)
of the COMESA Treaty and promulgated the COMESA Competition Regulations as
the legal framework to apply to regulation of competition within the COMESA region
to avoid firms engaging in restrictive business practices that affected the efficient
operation of the common market.
• A merger must be notified to the COMESA Competition Commission (CCC) where
both the acquiring firm and target firm or either the acquiring firm or target firm
operate in two or more member states
• COMESA GIVES NOD TO MOSANTO
• Comesa okays KenolKobil acquisition deal
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MERGERS
• A merger is a voluntary amalgamation of two firms on roughly equal terms into
one new legal entity. The decision is usually mutual between the merging
companies. Mergers are mostly geared towards enjoying greater economies of
scale and increasing a companies competitiveness in the market.
• The term “merger” is defined in Section 2 of the Competition Act, 2010 (the Act)
as “any acquisition of shares, business or other assets, whether inside or outside
of Kenya, resulting in the change of control of a business, part of a business or
an asset of a business in Kenya, in any manner and includes a takeover. Sec 41 of
the Act goes ahead to define mergers in greater details to include
a) the purchase or lease of shares, acquisition of an interest, or purchase of assets
of the other undertaking in question;
(b) the acquisition of a controlling interest in a section of the business of an
undertaking capable of itself being operated independently
• The Capital Markets (Take-overs and mergers) Regulations, 2002 provides that a
merger is an arrangement whereby the assets of two or more companies become
vested in or under the control of one company
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• A horizontal merger is characterized by the combination of two companies
that operate in the same market. It’s typically performed to reduce competition.
With a horizontal merger, two similar companies are combined so that they no
longer have to fight each other for the same customers.
• Vertical merger occurs when two companies in different stages of production
join together to form a single company. Vertical mergers are performed to
increase efficiency. An automobile company joining with a parts supplier or
Coca cola merger with restaurant chains that it supplies with beverages is a
vertical merger.
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TAKEOVERS
According to the Capital Markets (take-overs and mergers) Regulations, 2002, a
take-over offer means a general offer to acquire all voting shares in the offeree
company and includes a takeover scheme
• “take-over scheme” means a scheme involving the making of offers for
acquisition by or on behalf of a person of -
(a) all voting shares in the offeree;
(b) such shares in any company which results in an offeror acquiring effective
control in an offeree;
(c) any shareholding of twenty five percent or more in a subsidiary of a listed
company that has contributed fifty percent or more to the average annual turnover
in the latest three financial years of the listed company preceding the acquisition;
or
(d) any acquisition deemed by the Authority to constitute a take-over scheme
1. REGULATOR REJECTS TUSKYS NAKUMATT MERGER
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Takeovers can be classified as
• Hostile takeovers- acquiring all or a majority of the company’s shares giving the
acquiring company control or ownership of the target company without consent of board
of directors or shareholders
• Friendly takeovers/acquisitions usually occurs with the knowledge and consent of the
board of the target company. In some cases it can be negotiated through a consensual
process.
• The difference between a friendly and hostile takeover is solely in the manner in which
the company is taken over. In a friendly takeover, the target company’s management and
board of directors approve the takeover proposal and help to implement it. However, in a
hostile takeover, the management and board of directors of the targeted company oppose
the intended takeover.
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Research/expert
analysis on
possible merger
DISCLOSURES
Filing of
Notification of
Merger
Letter of intention
either rejected or
accepted
Submission of
further documents
within 30 days
Meeting held to
discuss the letter
of intention
Letter of intent
sent to target
company
Passing of
resolution to
merge companies
Approval or
Rejection
Consideration of
application by
CAK
Preparation of
Merger
Agreement
NDAs and
Exclusivity
Agreements drawn
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GENERAL OVERVIEW OF MERGER PROCESS
LETTER OF INTENT/TERM SHEET
• A letter of intent (LOI) can be looked at as a document that sets out the offer and acceptance
of the parties to merge. As the name implies, the LOI lays out the intent of both parties: It
lays out the proposed terms. Also known Term Sheets or Memorandum of Understanding
• In an acquisition the acquiring entity submits the LOI to target entity. In most cases the
acquirers lawyer draft the LOI, although the lawyer has to make sure the business terms are
what Buyer wants. However the same can be modified after discussions with the target
entity's lawyer
• The LOI is an important step because it lays out the basics of the final deal: the purchase
price and terms, closing date, length of exclusivity, approvals, and much, much more.
However, the LOI isn’t necessarily the final deal. Rather, it’s the framework or roadmap for
that final deal. Based on what each side discovers during due diligence, and/or whether the
profits of the company decline, the deal may change. It sets out certain terms of a transaction
agreed in principle between parties, and is typically negotiated and signed at the beginning
of a transaction.
• Term sheets evidences serious intent, but generally are not legally binding. Although the
term sheet itself is not typically legally binding, some term sheets contain certain legally
binding provisions (for example, confidentiality or exclusivity
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Confidentiality, NDAs and Non-circumvention agreements
• Confidentiality is crucial in the process of mergers and acquisitions. If leaked, information
obtained through private discussions could derail the potential transaction and have a
significant negative impact on the businesses’ ongoing operations, value and prospects.
• It is important to secure a Non-Disclosure Agreement (NDA)before Starting the
negotiations. Merging parties aim to preserve confidentiality for free exchange of
information
• The terms of the NDA will depend on several factors including the size and locations of
operations, the business industry and whether a company is privately owned or public. The
goals of the merger should also be considered – if it is strategic or financial.
• A non-circumvention agreement that- is intended for use by a company (or by an
individual) that is engaged in a business transaction (or series of transactions) but who
wants to ensure:
• (1) that the identity of the introducing party's contact(s) remain(s) confidential, and
• (2) that the other party will not bypass or circumvent the introducing party and engage that
party's contact(s) directly. If the other party violates the agreement and circumvents the
introducing party and inappropriately engages the contact(s) for the purpose of doing
business with them directly (cutting out the introducing party), that party is liable for
breach. It also contains non-disclosure clauses.
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EXCLUSIVITY AGREEMENTS
• An LOI usually includes a lock-up period where merger/acquisition
negotiations have begun the parties will not have discussions with other
parties in separate negotiations during an agreed period o f time.
• An exclusivity agreement prevents a target entity from negotiating a sale with
other potential acquirers during an agreed upon period of time. The
exclusivity agreement puts the parties in a better position because they don’t
have worry about flip flopping during negotiations
• The agreement gives confidence to the acquirer that the target is serious about
negotiating the sale. An exclusivity agreement is also called a “no-shop”
agreement.
• The length of the exclusivity agreement depends on the amount of time you
need to conduct due diligence and negotiate the final details. You may also
negotiate automatic renewals of exclusivity as negotiations continue or even
termination of exclusivity if certain events occur.
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DUE DILIGENCE
• Due diligence is a process of verification, investigation, or audit of a potential
deal or investment opportunity to confirm all relevant facts and financial
information, and to verify anything else that was brought up during an M&A
preliminary negotiation process.
• Diligence covers areas like
• Financial- balance sheets, financial reports, audit reports- Correctness
• Legal- Intellectual Property, contractual obligations, legal encumbrances, legal suits
• Commercial- Products and services offered, target market
• Tax
• Enviroemental
• Due diligence process
• Preparation of a checklist
• Collection of necessary information- meetings, questionnaires, searches
• Analysis of information collected
• Preparation and presentation of a due diligence report
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Due Diligence Questionnaire
• A due diligence questionnaire (DDQ) is a list of frequently asked questions
required by the merging companies to effectively undertake the merging
process and to mitigate risk. It is a framework to use during initial due diligence
work
• While the DDQ will vary depending upon the deal type and target company,
there are basic categories practitioners have learned to investigate and baseline
questions practitioners have learned to ask.
• While the DDQ does not eliminate all the work and investigation involved in
diligence, it can identify early risks and red flags, allowing the buyer to decide
if it would be advantageous to proceed.
• A due diligence report is then prepared and is subject to discussions by the
executive team who are evaluating the transaction and is a requirement for
mergers
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LEGAL DILIGENCE CHECKLISTS/KEY AREAS
• Owners/Directors/Shareholders
• Capital structure/value of company
• Financial Records
• Assets/Liabilities
• Credit agreements, loan agreements, and lease agreements.
• Security agreements, mortgages, and other liens,
• Guarantees by the Company of third-party obligations,
• Investments in other companies or entities/Acquisitions of companies or assets.
• All material contracts, agreements, and policies.
• Patents, copyrights. Trademarks, licenses or assignments
• Employees welfare/Intergration
• Conflicts of Interest
• Other sector specific regulations e.g Banking, Insurance
• Sources of funding.
• Impact of merger on competition
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• Condition precedent stage – Regulatory approvals
• Competition authority approval
• Sector specific Approval –CBK /insurance regulator/CMA
Post clearance
• Merger
• Transfer at company Registry and lands registry
• Challenges – Regulatory approvals not obvious-Airtel and Telkom
approved with conditions
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DISCLOSURE LETTER
• A key document in any acquisition which is prepared by the seller in the
transaction and includes general and specific disclosures regarding the seller's
business that are important in the due diligence process for the buyer
• The buyer will usually agree that the seller will not be liable for liabilities
disclosed in the disclosure letter. From the seller’s point of view, it limits
his/her liability in the acquisition agreement. From the buyer’s point of view,
it acts as an important source of information about the business or company
being sold.
• It usually consists of two parts, (a) the general disclosures consisting of
information which would be available to any buyer searching a publicly
available register, and (b) specific disclosures, linked directly to the company
at hand.
• The disclosure letter is an important part of the due diligence process.
• Later on the seller can be liable for material facts that should have been
disclosed if they later they are held to be of importance to the acquisition
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THE COMPETITION AUTHORITY OF KENYA
• The Competition Authority of Kenya (CAK) is established by the Competition
Act, 2010 (the Act). Its mandate is to promote and safeguard competition in the
national economy.
• The Mergers and Acquisitions Department analyzes notified merger applications
and, either, approves the transaction with or without conditions or rejects it.
• The Department also investigates all mergers that may have been implemented
without the Authority’s approval and gives recommendations, it also identifies
and analyses unwarranted concentration of economic power.
• Section 42 (2) of the Act requires that merging entities should seek the approval
of the Authority prior to implementing a merger where such merger would lead
to the acquisition of control over an undertaking.
• Section 42 (1) of the Act also authorizes the Authority to exclude any proposed
merger from the requirement of approval.
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Merger Notifications (Non listed companies)
• There are two types of notifications that the Authority receives; Mergers and
Exclusions.
• A merger refers to acquisition of shares, business or other assets whether inside
or outside Kenya resulting in change of control of a business, part of business
or an asset of a business in Kenya in any manner and includes a takeover.
• An exclusion refers to mergers which do not meet the required merger
threshold for mandatory notification as contained in the Merger Threshold
Guidelines and the merging entities are seeking to be excluded from the
process
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• Once the merger has been proposed, the companies involved notify the
Competition Authority of their intention in writing through a
notification.
• Within 30 days of receipt of the notice, the Authority may request
for further information from either company which must be
furnished in writing.
• The main documents required to accompany the merger notification
form are
• The proposed merger agreement
• audited financial statements for the last three years;
• latest annual reports;
• board resolutions and related documents regarding the merger
decision; and
• a breakdown of employees and restructuring plan.
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• The Authority may require any other information it deems pertinent to
determination of the merger.
• The Authority will then consider the application and make a determination
within sixty days of receipt of the further information. This period may be
extended if there are complex issues involved, but by no more than a further
sixty days.
• See effects of the Merger threshold guidelines
• See Sec 904 of the Companies Act 2015, on documents merging companies
are required to prepare.
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• The criteria for making a determination includes
• its completeness, and where necessary additional information, may be requested, or clarifications sought;
• if the proposed merger is a ‘merger’ within the meaning of the Act;
• if the Authority has extra-territorial jurisdiction over the proposed merger;
• if the proposed merger meets the thresholds under the Merger Threshold Guidelines to determine if an
application for exclusion from the provisions of Part IV of the Act is appropriate; and
• any requests for confidentiality that may have been sought, and if acceptable such confidentiality is
granted by a letter early on in the evaluation process.
• the effect on other competitors
• the extent to which it may restrict trade,
• whether the resulting entity will acquire a dominant position in the market,
• the benefit to the public that will outweigh any detriment,
• the effect on any particular industry or region, or even on employment.
• In approving the acquisition of Buzeki Dairy Limited by Brookside Dairy
Limited, the Authority analyzed the business models of the companies as well as
their target market and market shares in respect of their products. The merger
was approved as the data collected showed that it would generate efficiencies and
enable Brookside to compete locally and internationally
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• Once a complete merger assessment has been made by the case officer
together with the authority’s mergers and acquisition division
recommendations are made to its board for a determination.
• The board then makes its determination, within the prescribed periods and its
decision is communicated to the submitting parties.
• This approval may be revoked if the Authority’s decision was based on
materially incorrect or misleading information for which a party to the merger
is responsible or on non-compliance with a condition that is attached to the
approval. Sec 47 (1)
• Kenya’s Airtel, Telkom Win Appeal Against Watchdog-
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• Mergers which proceed without an authorizing order from the CAK have no
legal effect and are unenforceable in legal proceedings.
• Any person who implements a merger without CAK approval may be liable for
fines not exceeding KSh10 million or a prison term not exceeding five years or
both. The CAK may also impose a financial penalty not exceeding 10% of the
preceding year's gross annual turnover of the undertaking or undertakings in
question.
• CAK fines Asante Group for merging without approval
• Additionally the Competition (General) Rules, 2019 merger thresholds have
been made more distinct with an addition of block exemptions for small
transactions that will provide significant respite for small investments in
Kenya.
• Another plus in the Rules is that transactions notified to the COMESA
Competition Commission will not require simultaneous approval from the
Competition Authority of Kenya (the CAK).
• CAK relaxes rules for small firms
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TAKEOVERS (listed companies)
• The Companies Act, under s 584, defines Takeover as making an offer to
acquire shares, if such offer includes any of the conditions under s 584 (2) and
(3).
• First condition- whether the offer is to acquire all the shares in a company, or
acquisition of one class or all classes of shares – exclusive of shares that
might be held by the offeror.
• Second condition- the terms are consistent to all shares, even when there are
different classes, to all respective class of shares.
• A takeover offer is defined under the Takeovers and Mergers Regulations as a
general offer to acquire all voting shares in the Offeree company (“Target
Company”). A reference to a takeover offer includes a takeover scheme.
• CEO rules out take over bid
• See Takeover Guide Kenya
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Provisions under the Capital Markets (Take-overs-and-mergers)
Regulations-2002
• Notice of intention- Under Regulation 4(1), the company (offeror) which
intends to acquire the effective control of the listed company (offeree) shall not
later than 24 hours of resolving to take over the offeree announce the proposed
offer by a notice published in the press and serve a notice of intention, in
writing of the take-over scheme, to the offeree, CMA, NSE and Commissioner
of Monopolies and Prices.
• Under Regulation 4(4), the offeror shall serve on the offeree its statement of
the take-over scheme within 10 days from the date of the notice of intention
referred to in Regulation 4(1) which statement shall be approved by the CMA.
• Regulation 6.(1) Upon receiving the offeror’s statement in accordance with
Regulation 4(4) the offeree shall inform the relevant securities exchange and
the Authority and make an announcement by a press notice of the proposed
takeover offer within twenty four hours of receipt of the offeror’s statement
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• Under Regulation 7(1), the offeror shall within 14 days of service of the offeror statement submit to the
CMA for approval the take-over document which CMA is required to approve within 30 days or such time
as CMA may determine. The document is required to be served on the offeree within five days of approval
by CMA.
• See Regulation 8 on the Requirements for a take over offer
• Under Regulation 10 the Board of directors of the offeree shall within fourteen days after the receipt of the
take-over offer issue a circular to the holders of voting shares to which the take-over offer relates, indicating
whether or not the board of directors recommend to holders of the voting shares the acceptance of the take-
over offer(s) made by the offeror under the take-over scheme
• Regulation 14 An offeror must keep a take-over offer open for acceptances for a period of 30 days from the
date the take0over document is first served
• Regulation 18. (1) A take-over offer shall be deemed to close on the last day of the offer period. (2) A
holder of the voting shares in the offeree may withdraw acceptance out of his own volition at any time
before the closing of the offer.
• Competing bids may be served for up to 10 days before the offer period ends. When competitive bidding
ensues, the CMA may vary the timeframes to require all bids and variations to be received within a fixed
period.
• Take over offer checklist
• Summary of the Takeover process
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Rights of minorities
• In 2019, the Companies Act was amended through the Statute Law (Miscellaneous
Amendments) Act no.12 of 2019, to lower the take-over threshold to 50%.
• The reduced threshold was also seen to undermine the right of minority shareholders to
decline the offer.
• The Business Laws Amendment Act 2020 amended the Companies Act to reinstate the
threshold for “squeeze-ins” and “sell-outs” to 90%. The previous threshold of 50% was
impractical and not in line with the global practice.
• “Squeezing-in” permits an investor, to acquire minority shareholdings on a compulsory
basis if it has acquired not less than 90% in value of the shares and not less than 90% of
the voting rights carried by the shares to which the offer relates.
• A “sell out” occurs where minority shareholder require the offeror to purchase their
shares in each case on the same terms as the offer.
• Further reading
• Sec 611 of the Companies Act 2015.
• See Bowmans Article
• How minority shareholders have scuttled takeover bids at NSE
• Hostile Takeovers At Kenya’s NSE Loom With New Forced Buyout Rules-
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Defences to takeovers
a. A competing bid from a strategic investor is often the most attractive form of anti-
takeover defence.
b. Target companies may also make counter-offers to purchase the shares at a premium
this includes a company buying a sizable portion of its own shares, which prevents
the acquiring company from purchasing the shares and becoming the majority
owner.
c. A target entity may modify its capital structure and force a re-evaluation of the deal's
attractiveness or seek white knight offers from other players in the relevant industry.
d. Further anti-takeover Defences may be prescribed in a listed company's articles of
association.
e. Targets may persuade the existing shareholders to reject the offer based on the
independent adviser's evaluation.
• Confidentiality is key to prevent the any counters to the acquisition
• Keeping the proposed bid as confidential as possible until it is announced generally
assists in protecting the deal. Entering into voting agreements to secure the minimum
percentage of shares to be taken up may help encourage a friendly deal.
• 17 Defenses Against Hostile Takeovers-
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Reverse Takeovers (RTOs)
• A reverse takeover enables a private company to go public without the attached costs
and time delay of an initial public offering (IPO).
• In the RTO a smaller firm will acquire management control of a larger or longer
established company and keep its name for the combined entity. This is known as a
reverse takeover. Another type of acquisition is reverse merger which enables a
private company to get publicly listed in a short period of time. This occurs when a
private company that has strong prospects and is eager to raise financing buys a
publicly listed shell company, usually one with no business and limited assets.
• RTOs have often been deemed to be the poor man’s initial public offering (IPO)
• Sometimes, conversely, the public company is bought by the private company
through an asset swap and share issue.
• June 25, 2013: The first reverse takeover transaction in East Africa was completed
when I&M Holdings began trading on the NSE.
• I&M Bank secures NSE listing with City Trust merger
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LINKS
• 1. LETTERS: Demystifying mergers, takeovers of firms - Business Daily- https://www.businessdailyafrica.com/analysis/letters/Demystifying-mergers-takeovers-
of-firms/4307714-5128932-bkmmuv/index.html
• 2. Potential challenges of the mergers and acquisitions strategy- https://www.businessdailyafrica.com/analysis/columnists/Potential-challenges-of-the-
mergers-and--acquisitions-strategy/4259356-4894336-8w2e3c/index.html
• 3. Merger Control in Kenya MMAN ADVOCATES https://www.lexology.com/library/detail.aspx?g=7aefaef4-36fd-4513-9f13-53a7c1543b98
• 4. Licensing ban spurs acquisition of Banks- https://www.businessdailyafrica.com/corporate/companies/Licensing-ban-spurs-acquisitions-of-banks/4003102-
5425322-104msqhz/index.html
• 5. Jamii Bora renamed Kingdom Bank after acquisition by Coop Bank- https://www.businessdailyafrica.com/corporate/companies/Co-operative-Bank-
renames-Jamii-Bora-appoints-new-CEO/4003102-5613736-4kydof/index.html
• 6. NIC and CBA merger- https://www.businessdailyafrica.com/news/Regulator-approves-CBA-NIC-merger/539546-5112672-52vish/index.html
• 7. Key tax and legal issues to consider in a merger deal- https://www.businessdailyafrica.com/lifestyle/pfinance/Tax-issues-consider-merger-deal/4258410-
5007238-15s2ac0z/index.html
• 8. Key tax and legal issues to consider in a merger deal - https://www.businessdailyafrica.com/lifestyle/pfinance/Tax-issues-consider-merger-deal/4258410-
5007238-15s2ac0z/index.html
• 9. Matters to consider during an M&A- https://www.oraro.co.ke/2018/06/26/step-lightly-matters-to-consider-during-ma-deals-in-kenya/
• 10. Mergers and Acquisitions, Oganya Ombo Advocates- https://onganyaombo.com/?p=937
• 11. Former Safaricom boss sell 21% shareholding in Safaricom- https://www.standardmedia.co.ke/business/article/2001381328/former-safaricom-boss-sells-
21-per-cent-stake-in-telco
• 12. Conditions overturned in Telkom Kenya/Airtel Kenya merger in first appeal under Kenyan Competition Act
https://www.insideafricalaw.com/blog/conditions-overturned-in-telkom-kenyaairtel-kenya-merger-in-first-appeal-under-kenyan-competition-act
• 13. UK firm acquires Resolution Insurance: https://www.standardmedia.co.ke/business/business/article/2001418356/uk-firm-finalises-acquisition-of-kenyan-
insurer
• 14. I&M acquires Ugandan Bank: https://www.standardmedia.co.ke/business/business/article/2001411711/im-completes-acquisition-of-orient-bank-uganda
5/19/2024 46
WAKIMANI
• 15. Telcom Kenya and Anor Vs CAK-
• 16. Evans Aseto & another v National Bank of Kenya (NBK) & another; Central Bank of Kenya & another (Interested Parties) [2019] eKLR
• 17. How NBK was brought to its death bed
• 18. KCB offers to acquire NBK
• 19. KCB changes acquisition plans with NBK
• 20. KCB pump 5 billion capital into NBK
5/19/2024 WAKIMANI 47

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Mergers and Acquisitions in Kenya - An explanation

  • 2. • Mergers are like marriages. They are the bringing together of two individuals. If you wouldn't marry someone for the 'operational efficiencies' they offer in the running of a household, then why would you combine two companies with unique cultures and identities for that reason? Simon Sinek • Reasonable mergers generate substantial synergies, so that provides for earnings and cash-flow growth even if it doesn't provide for revenue growth, and I think that's a big driver. 5/19/2024 WAKIMANI 2
  • 4. 5/19/2024 WAKIMANI 4 COMPANY X • Private Co. Limited by shares • 3 Directors/shareholders • 1 million shares- Ksh 1each • Export and Import Hardware and Agro- products • Yearly Net profit for FY 2019 1.2 million • Private Co. Limited by shares • 2 Directors • 3 shareholders • 100,000 shares- Ksh 5 each • Fintech combined with distribution, marketing and leasing farm machinery • Yearly Net profit for FY 2019 Ksh 800,000 COMPANY Y COMPANY XY • Incorporation of new company • Company X and Company Y wound up • New articles of association • New shareholding structure • 6 Directors • New business structure of the company • Combined assets
  • 5. 5/19/2024 WAKIMANI 5 COMPANY X • Private Co. Limited by shares • 3 Directors/shareholders • 1 million shares- Ksh 1 each • Export and Import Hardware and Agro- products • Yearly Net profit for FY 2019 1.2 million • Private Co. Limited by shares • 2 Directors • 3 shareholders • 100,000 shares- Ksh 5 each • Fintech combined with distribution, marketing and leasing farm machinery • Yearly Net profit for FY 2019 Ksh 800,000 COMPANY Y • Shareholding redistributed based on the value of shares held by shareholders • New Board of Directors with representation from X & Y • Company X retains its brand/identity • Company Y is wound up but gains in shareholding in the merged entity • Company Y retains its business structure and but is answerable to the board • E.g KCB and National bank subsidiary • Meridian group of hospitals Africa Group holdings COMPANY X
  • 6. Why merger or acquisition • National bank in distress and required capitalization and shopping for an investor • KCB needed to invest ,expand footprint and size • NIC and CBA – Equal size , growth ,non needs capital more than the other , merge, consolidate and utilize the economies of scale for growth. Now 3rd largest bank in assets. • Majority control – 50 percent plus becomes subsidiary • Rubis Kenol Kobil- prime region to set footprint 100 % acquisition enabling Rubis to have a business without green field entity,Gulf energy and are the largest player in the downstream oil sector. 5/19/2024 WAKIMANI 6
  • 7. Considerations Commercial • Valuation of the entity /willingness to pay • Returns on investment Due diligence concerns • Potential liability • Potential exposures –target paying taxes,legal suits Post merger integration • Culture of acquirer /target • Employee value 5/19/2024 WAKIMANI 7
  • 15. LEGALAND INSTITUTIONAL FRAMEWORK FOR MERGERS AND TAKE- OVERS • Capital Markets Act • Capital Markets (Takeovers & Mergers) Regulations, 2002 • Competition Act • Companies Act 2015. • Capital Markets Authority • Competition Authority • Competition Tribunal • Capital Markets Tribunal. • The Capital Markets Tribunal is established under section 35A of the Act. It hears appeals from persons aggrieved by directions given by the CMA on any matter listed under section 35 (1) of the Capital Markets Act. • The Competition Tribunal is established under section 71 of the Competition Act and has power to review the decisions of the Competition Authority, including those made under section 46(6) of the Competition Act in relation to mergers. 5/19/2024 15 M &A
  • 16. • Other regulatory bodies East African Community Competition Authority • The East African Community Competition Authority (EACA) is an institution of the East African Community (EAC) established by Section 37 of the EAC Competition Act. Article 75 (1) (i) of the Treaty for the Establishment of the East African Community provides that Partner States agree to establish a Customs Union details of which shall be contained in a Protocol which shall, inter alia, include competition. COMESA Competition Commission • Kenya is also a member of the Common Market for Eastern and Central Africa (COMESA). In 2004, the Council of Ministers invoked the provisions of Article 55(3) of the COMESA Treaty and promulgated the COMESA Competition Regulations as the legal framework to apply to regulation of competition within the COMESA region to avoid firms engaging in restrictive business practices that affected the efficient operation of the common market. • A merger must be notified to the COMESA Competition Commission (CCC) where both the acquiring firm and target firm or either the acquiring firm or target firm operate in two or more member states • COMESA GIVES NOD TO MOSANTO • Comesa okays KenolKobil acquisition deal 5/19/2024 WAKIMANI 16
  • 17. MERGERS • A merger is a voluntary amalgamation of two firms on roughly equal terms into one new legal entity. The decision is usually mutual between the merging companies. Mergers are mostly geared towards enjoying greater economies of scale and increasing a companies competitiveness in the market. • The term “merger” is defined in Section 2 of the Competition Act, 2010 (the Act) as “any acquisition of shares, business or other assets, whether inside or outside of Kenya, resulting in the change of control of a business, part of a business or an asset of a business in Kenya, in any manner and includes a takeover. Sec 41 of the Act goes ahead to define mergers in greater details to include a) the purchase or lease of shares, acquisition of an interest, or purchase of assets of the other undertaking in question; (b) the acquisition of a controlling interest in a section of the business of an undertaking capable of itself being operated independently • The Capital Markets (Take-overs and mergers) Regulations, 2002 provides that a merger is an arrangement whereby the assets of two or more companies become vested in or under the control of one company 5/19/2024 17 WAKIMANI
  • 18. • A horizontal merger is characterized by the combination of two companies that operate in the same market. It’s typically performed to reduce competition. With a horizontal merger, two similar companies are combined so that they no longer have to fight each other for the same customers. • Vertical merger occurs when two companies in different stages of production join together to form a single company. Vertical mergers are performed to increase efficiency. An automobile company joining with a parts supplier or Coca cola merger with restaurant chains that it supplies with beverages is a vertical merger. 5/19/2024 WAKIMANI 18
  • 19. TAKEOVERS According to the Capital Markets (take-overs and mergers) Regulations, 2002, a take-over offer means a general offer to acquire all voting shares in the offeree company and includes a takeover scheme • “take-over scheme” means a scheme involving the making of offers for acquisition by or on behalf of a person of - (a) all voting shares in the offeree; (b) such shares in any company which results in an offeror acquiring effective control in an offeree; (c) any shareholding of twenty five percent or more in a subsidiary of a listed company that has contributed fifty percent or more to the average annual turnover in the latest three financial years of the listed company preceding the acquisition; or (d) any acquisition deemed by the Authority to constitute a take-over scheme 1. REGULATOR REJECTS TUSKYS NAKUMATT MERGER 5/19/2024 19 WAKIMANI
  • 20. Takeovers can be classified as • Hostile takeovers- acquiring all or a majority of the company’s shares giving the acquiring company control or ownership of the target company without consent of board of directors or shareholders • Friendly takeovers/acquisitions usually occurs with the knowledge and consent of the board of the target company. In some cases it can be negotiated through a consensual process. • The difference between a friendly and hostile takeover is solely in the manner in which the company is taken over. In a friendly takeover, the target company’s management and board of directors approve the takeover proposal and help to implement it. However, in a hostile takeover, the management and board of directors of the targeted company oppose the intended takeover. 5/19/2024 WAKIMANI 20
  • 22. Research/expert analysis on possible merger DISCLOSURES Filing of Notification of Merger Letter of intention either rejected or accepted Submission of further documents within 30 days Meeting held to discuss the letter of intention Letter of intent sent to target company Passing of resolution to merge companies Approval or Rejection Consideration of application by CAK Preparation of Merger Agreement NDAs and Exclusivity Agreements drawn 5/19/2024 22 WAKIMANI GENERAL OVERVIEW OF MERGER PROCESS
  • 23. LETTER OF INTENT/TERM SHEET • A letter of intent (LOI) can be looked at as a document that sets out the offer and acceptance of the parties to merge. As the name implies, the LOI lays out the intent of both parties: It lays out the proposed terms. Also known Term Sheets or Memorandum of Understanding • In an acquisition the acquiring entity submits the LOI to target entity. In most cases the acquirers lawyer draft the LOI, although the lawyer has to make sure the business terms are what Buyer wants. However the same can be modified after discussions with the target entity's lawyer • The LOI is an important step because it lays out the basics of the final deal: the purchase price and terms, closing date, length of exclusivity, approvals, and much, much more. However, the LOI isn’t necessarily the final deal. Rather, it’s the framework or roadmap for that final deal. Based on what each side discovers during due diligence, and/or whether the profits of the company decline, the deal may change. It sets out certain terms of a transaction agreed in principle between parties, and is typically negotiated and signed at the beginning of a transaction. • Term sheets evidences serious intent, but generally are not legally binding. Although the term sheet itself is not typically legally binding, some term sheets contain certain legally binding provisions (for example, confidentiality or exclusivity 5/19/2024 23 WAKIMANI)
  • 24. Confidentiality, NDAs and Non-circumvention agreements • Confidentiality is crucial in the process of mergers and acquisitions. If leaked, information obtained through private discussions could derail the potential transaction and have a significant negative impact on the businesses’ ongoing operations, value and prospects. • It is important to secure a Non-Disclosure Agreement (NDA)before Starting the negotiations. Merging parties aim to preserve confidentiality for free exchange of information • The terms of the NDA will depend on several factors including the size and locations of operations, the business industry and whether a company is privately owned or public. The goals of the merger should also be considered – if it is strategic or financial. • A non-circumvention agreement that- is intended for use by a company (or by an individual) that is engaged in a business transaction (or series of transactions) but who wants to ensure: • (1) that the identity of the introducing party's contact(s) remain(s) confidential, and • (2) that the other party will not bypass or circumvent the introducing party and engage that party's contact(s) directly. If the other party violates the agreement and circumvents the introducing party and inappropriately engages the contact(s) for the purpose of doing business with them directly (cutting out the introducing party), that party is liable for breach. It also contains non-disclosure clauses. 5/19/2024 24 WAKIMANI
  • 25. EXCLUSIVITY AGREEMENTS • An LOI usually includes a lock-up period where merger/acquisition negotiations have begun the parties will not have discussions with other parties in separate negotiations during an agreed period o f time. • An exclusivity agreement prevents a target entity from negotiating a sale with other potential acquirers during an agreed upon period of time. The exclusivity agreement puts the parties in a better position because they don’t have worry about flip flopping during negotiations • The agreement gives confidence to the acquirer that the target is serious about negotiating the sale. An exclusivity agreement is also called a “no-shop” agreement. • The length of the exclusivity agreement depends on the amount of time you need to conduct due diligence and negotiate the final details. You may also negotiate automatic renewals of exclusivity as negotiations continue or even termination of exclusivity if certain events occur. 5/19/2024 25 WAKIMANI
  • 26. DUE DILIGENCE • Due diligence is a process of verification, investigation, or audit of a potential deal or investment opportunity to confirm all relevant facts and financial information, and to verify anything else that was brought up during an M&A preliminary negotiation process. • Diligence covers areas like • Financial- balance sheets, financial reports, audit reports- Correctness • Legal- Intellectual Property, contractual obligations, legal encumbrances, legal suits • Commercial- Products and services offered, target market • Tax • Enviroemental • Due diligence process • Preparation of a checklist • Collection of necessary information- meetings, questionnaires, searches • Analysis of information collected • Preparation and presentation of a due diligence report 5/19/2024 26 WAKIMANI
  • 27. Due Diligence Questionnaire • A due diligence questionnaire (DDQ) is a list of frequently asked questions required by the merging companies to effectively undertake the merging process and to mitigate risk. It is a framework to use during initial due diligence work • While the DDQ will vary depending upon the deal type and target company, there are basic categories practitioners have learned to investigate and baseline questions practitioners have learned to ask. • While the DDQ does not eliminate all the work and investigation involved in diligence, it can identify early risks and red flags, allowing the buyer to decide if it would be advantageous to proceed. • A due diligence report is then prepared and is subject to discussions by the executive team who are evaluating the transaction and is a requirement for mergers 5/19/2024 27 WAKIMANI
  • 28. LEGAL DILIGENCE CHECKLISTS/KEY AREAS • Owners/Directors/Shareholders • Capital structure/value of company • Financial Records • Assets/Liabilities • Credit agreements, loan agreements, and lease agreements. • Security agreements, mortgages, and other liens, • Guarantees by the Company of third-party obligations, • Investments in other companies or entities/Acquisitions of companies or assets. • All material contracts, agreements, and policies. • Patents, copyrights. Trademarks, licenses or assignments • Employees welfare/Intergration • Conflicts of Interest • Other sector specific regulations e.g Banking, Insurance • Sources of funding. • Impact of merger on competition 5/19/2024 28 WAKIMANI
  • 30. • Condition precedent stage – Regulatory approvals • Competition authority approval • Sector specific Approval –CBK /insurance regulator/CMA Post clearance • Merger • Transfer at company Registry and lands registry • Challenges – Regulatory approvals not obvious-Airtel and Telkom approved with conditions 5/19/2024 WAKIMANI 30
  • 31. DISCLOSURE LETTER • A key document in any acquisition which is prepared by the seller in the transaction and includes general and specific disclosures regarding the seller's business that are important in the due diligence process for the buyer • The buyer will usually agree that the seller will not be liable for liabilities disclosed in the disclosure letter. From the seller’s point of view, it limits his/her liability in the acquisition agreement. From the buyer’s point of view, it acts as an important source of information about the business or company being sold. • It usually consists of two parts, (a) the general disclosures consisting of information which would be available to any buyer searching a publicly available register, and (b) specific disclosures, linked directly to the company at hand. • The disclosure letter is an important part of the due diligence process. • Later on the seller can be liable for material facts that should have been disclosed if they later they are held to be of importance to the acquisition 5/19/2024 31 WAKIMANI
  • 32. THE COMPETITION AUTHORITY OF KENYA • The Competition Authority of Kenya (CAK) is established by the Competition Act, 2010 (the Act). Its mandate is to promote and safeguard competition in the national economy. • The Mergers and Acquisitions Department analyzes notified merger applications and, either, approves the transaction with or without conditions or rejects it. • The Department also investigates all mergers that may have been implemented without the Authority’s approval and gives recommendations, it also identifies and analyses unwarranted concentration of economic power. • Section 42 (2) of the Act requires that merging entities should seek the approval of the Authority prior to implementing a merger where such merger would lead to the acquisition of control over an undertaking. • Section 42 (1) of the Act also authorizes the Authority to exclude any proposed merger from the requirement of approval. 5/19/2024 32 WAKIMANI
  • 33. Merger Notifications (Non listed companies) • There are two types of notifications that the Authority receives; Mergers and Exclusions. • A merger refers to acquisition of shares, business or other assets whether inside or outside Kenya resulting in change of control of a business, part of business or an asset of a business in Kenya in any manner and includes a takeover. • An exclusion refers to mergers which do not meet the required merger threshold for mandatory notification as contained in the Merger Threshold Guidelines and the merging entities are seeking to be excluded from the process 5/19/2024 33 WAKIMANI
  • 35. • Once the merger has been proposed, the companies involved notify the Competition Authority of their intention in writing through a notification. • Within 30 days of receipt of the notice, the Authority may request for further information from either company which must be furnished in writing. • The main documents required to accompany the merger notification form are • The proposed merger agreement • audited financial statements for the last three years; • latest annual reports; • board resolutions and related documents regarding the merger decision; and • a breakdown of employees and restructuring plan. 5/19/2024 35 WAKIMANI
  • 36. • The Authority may require any other information it deems pertinent to determination of the merger. • The Authority will then consider the application and make a determination within sixty days of receipt of the further information. This period may be extended if there are complex issues involved, but by no more than a further sixty days. • See effects of the Merger threshold guidelines • See Sec 904 of the Companies Act 2015, on documents merging companies are required to prepare. 5/19/2024 WAKIMANI 36
  • 37. • The criteria for making a determination includes • its completeness, and where necessary additional information, may be requested, or clarifications sought; • if the proposed merger is a ‘merger’ within the meaning of the Act; • if the Authority has extra-territorial jurisdiction over the proposed merger; • if the proposed merger meets the thresholds under the Merger Threshold Guidelines to determine if an application for exclusion from the provisions of Part IV of the Act is appropriate; and • any requests for confidentiality that may have been sought, and if acceptable such confidentiality is granted by a letter early on in the evaluation process. • the effect on other competitors • the extent to which it may restrict trade, • whether the resulting entity will acquire a dominant position in the market, • the benefit to the public that will outweigh any detriment, • the effect on any particular industry or region, or even on employment. • In approving the acquisition of Buzeki Dairy Limited by Brookside Dairy Limited, the Authority analyzed the business models of the companies as well as their target market and market shares in respect of their products. The merger was approved as the data collected showed that it would generate efficiencies and enable Brookside to compete locally and internationally 5/19/2024 37 WAKIMANI
  • 38. • Once a complete merger assessment has been made by the case officer together with the authority’s mergers and acquisition division recommendations are made to its board for a determination. • The board then makes its determination, within the prescribed periods and its decision is communicated to the submitting parties. • This approval may be revoked if the Authority’s decision was based on materially incorrect or misleading information for which a party to the merger is responsible or on non-compliance with a condition that is attached to the approval. Sec 47 (1) • Kenya’s Airtel, Telkom Win Appeal Against Watchdog- 5/19/2024 38 WAKIMANI
  • 39. • Mergers which proceed without an authorizing order from the CAK have no legal effect and are unenforceable in legal proceedings. • Any person who implements a merger without CAK approval may be liable for fines not exceeding KSh10 million or a prison term not exceeding five years or both. The CAK may also impose a financial penalty not exceeding 10% of the preceding year's gross annual turnover of the undertaking or undertakings in question. • CAK fines Asante Group for merging without approval • Additionally the Competition (General) Rules, 2019 merger thresholds have been made more distinct with an addition of block exemptions for small transactions that will provide significant respite for small investments in Kenya. • Another plus in the Rules is that transactions notified to the COMESA Competition Commission will not require simultaneous approval from the Competition Authority of Kenya (the CAK). • CAK relaxes rules for small firms 5/19/2024 39 WAKIMANI
  • 40. TAKEOVERS (listed companies) • The Companies Act, under s 584, defines Takeover as making an offer to acquire shares, if such offer includes any of the conditions under s 584 (2) and (3). • First condition- whether the offer is to acquire all the shares in a company, or acquisition of one class or all classes of shares – exclusive of shares that might be held by the offeror. • Second condition- the terms are consistent to all shares, even when there are different classes, to all respective class of shares. • A takeover offer is defined under the Takeovers and Mergers Regulations as a general offer to acquire all voting shares in the Offeree company (“Target Company”). A reference to a takeover offer includes a takeover scheme. • CEO rules out take over bid • See Takeover Guide Kenya 5/19/2024 WAKIMANI 40
  • 41. Provisions under the Capital Markets (Take-overs-and-mergers) Regulations-2002 • Notice of intention- Under Regulation 4(1), the company (offeror) which intends to acquire the effective control of the listed company (offeree) shall not later than 24 hours of resolving to take over the offeree announce the proposed offer by a notice published in the press and serve a notice of intention, in writing of the take-over scheme, to the offeree, CMA, NSE and Commissioner of Monopolies and Prices. • Under Regulation 4(4), the offeror shall serve on the offeree its statement of the take-over scheme within 10 days from the date of the notice of intention referred to in Regulation 4(1) which statement shall be approved by the CMA. • Regulation 6.(1) Upon receiving the offeror’s statement in accordance with Regulation 4(4) the offeree shall inform the relevant securities exchange and the Authority and make an announcement by a press notice of the proposed takeover offer within twenty four hours of receipt of the offeror’s statement 5/19/2024 WAKIMANI 41
  • 42. • Under Regulation 7(1), the offeror shall within 14 days of service of the offeror statement submit to the CMA for approval the take-over document which CMA is required to approve within 30 days or such time as CMA may determine. The document is required to be served on the offeree within five days of approval by CMA. • See Regulation 8 on the Requirements for a take over offer • Under Regulation 10 the Board of directors of the offeree shall within fourteen days after the receipt of the take-over offer issue a circular to the holders of voting shares to which the take-over offer relates, indicating whether or not the board of directors recommend to holders of the voting shares the acceptance of the take- over offer(s) made by the offeror under the take-over scheme • Regulation 14 An offeror must keep a take-over offer open for acceptances for a period of 30 days from the date the take0over document is first served • Regulation 18. (1) A take-over offer shall be deemed to close on the last day of the offer period. (2) A holder of the voting shares in the offeree may withdraw acceptance out of his own volition at any time before the closing of the offer. • Competing bids may be served for up to 10 days before the offer period ends. When competitive bidding ensues, the CMA may vary the timeframes to require all bids and variations to be received within a fixed period. • Take over offer checklist • Summary of the Takeover process 5/19/2024 WAKIMANI 42
  • 43. Rights of minorities • In 2019, the Companies Act was amended through the Statute Law (Miscellaneous Amendments) Act no.12 of 2019, to lower the take-over threshold to 50%. • The reduced threshold was also seen to undermine the right of minority shareholders to decline the offer. • The Business Laws Amendment Act 2020 amended the Companies Act to reinstate the threshold for “squeeze-ins” and “sell-outs” to 90%. The previous threshold of 50% was impractical and not in line with the global practice. • “Squeezing-in” permits an investor, to acquire minority shareholdings on a compulsory basis if it has acquired not less than 90% in value of the shares and not less than 90% of the voting rights carried by the shares to which the offer relates. • A “sell out” occurs where minority shareholder require the offeror to purchase their shares in each case on the same terms as the offer. • Further reading • Sec 611 of the Companies Act 2015. • See Bowmans Article • How minority shareholders have scuttled takeover bids at NSE • Hostile Takeovers At Kenya’s NSE Loom With New Forced Buyout Rules- 5/19/2024 43 WAKIMANI
  • 44. Defences to takeovers a. A competing bid from a strategic investor is often the most attractive form of anti- takeover defence. b. Target companies may also make counter-offers to purchase the shares at a premium this includes a company buying a sizable portion of its own shares, which prevents the acquiring company from purchasing the shares and becoming the majority owner. c. A target entity may modify its capital structure and force a re-evaluation of the deal's attractiveness or seek white knight offers from other players in the relevant industry. d. Further anti-takeover Defences may be prescribed in a listed company's articles of association. e. Targets may persuade the existing shareholders to reject the offer based on the independent adviser's evaluation. • Confidentiality is key to prevent the any counters to the acquisition • Keeping the proposed bid as confidential as possible until it is announced generally assists in protecting the deal. Entering into voting agreements to secure the minimum percentage of shares to be taken up may help encourage a friendly deal. • 17 Defenses Against Hostile Takeovers- 5/19/2024 44 WAKIMANI
  • 45. Reverse Takeovers (RTOs) • A reverse takeover enables a private company to go public without the attached costs and time delay of an initial public offering (IPO). • In the RTO a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover. Another type of acquisition is reverse merger which enables a private company to get publicly listed in a short period of time. This occurs when a private company that has strong prospects and is eager to raise financing buys a publicly listed shell company, usually one with no business and limited assets. • RTOs have often been deemed to be the poor man’s initial public offering (IPO) • Sometimes, conversely, the public company is bought by the private company through an asset swap and share issue. • June 25, 2013: The first reverse takeover transaction in East Africa was completed when I&M Holdings began trading on the NSE. • I&M Bank secures NSE listing with City Trust merger 5/19/2024 WAKIMANI 45
  • 46. LINKS • 1. LETTERS: Demystifying mergers, takeovers of firms - Business Daily- https://www.businessdailyafrica.com/analysis/letters/Demystifying-mergers-takeovers- of-firms/4307714-5128932-bkmmuv/index.html • 2. Potential challenges of the mergers and acquisitions strategy- https://www.businessdailyafrica.com/analysis/columnists/Potential-challenges-of-the- mergers-and--acquisitions-strategy/4259356-4894336-8w2e3c/index.html • 3. Merger Control in Kenya MMAN ADVOCATES https://www.lexology.com/library/detail.aspx?g=7aefaef4-36fd-4513-9f13-53a7c1543b98 • 4. Licensing ban spurs acquisition of Banks- https://www.businessdailyafrica.com/corporate/companies/Licensing-ban-spurs-acquisitions-of-banks/4003102- 5425322-104msqhz/index.html • 5. Jamii Bora renamed Kingdom Bank after acquisition by Coop Bank- https://www.businessdailyafrica.com/corporate/companies/Co-operative-Bank- renames-Jamii-Bora-appoints-new-CEO/4003102-5613736-4kydof/index.html • 6. NIC and CBA merger- https://www.businessdailyafrica.com/news/Regulator-approves-CBA-NIC-merger/539546-5112672-52vish/index.html • 7. Key tax and legal issues to consider in a merger deal- https://www.businessdailyafrica.com/lifestyle/pfinance/Tax-issues-consider-merger-deal/4258410- 5007238-15s2ac0z/index.html • 8. Key tax and legal issues to consider in a merger deal - https://www.businessdailyafrica.com/lifestyle/pfinance/Tax-issues-consider-merger-deal/4258410- 5007238-15s2ac0z/index.html • 9. Matters to consider during an M&A- https://www.oraro.co.ke/2018/06/26/step-lightly-matters-to-consider-during-ma-deals-in-kenya/ • 10. Mergers and Acquisitions, Oganya Ombo Advocates- https://onganyaombo.com/?p=937 • 11. Former Safaricom boss sell 21% shareholding in Safaricom- https://www.standardmedia.co.ke/business/article/2001381328/former-safaricom-boss-sells- 21-per-cent-stake-in-telco • 12. Conditions overturned in Telkom Kenya/Airtel Kenya merger in first appeal under Kenyan Competition Act https://www.insideafricalaw.com/blog/conditions-overturned-in-telkom-kenyaairtel-kenya-merger-in-first-appeal-under-kenyan-competition-act • 13. UK firm acquires Resolution Insurance: https://www.standardmedia.co.ke/business/business/article/2001418356/uk-firm-finalises-acquisition-of-kenyan- insurer • 14. I&M acquires Ugandan Bank: https://www.standardmedia.co.ke/business/business/article/2001411711/im-completes-acquisition-of-orient-bank-uganda 5/19/2024 46 WAKIMANI
  • 47. • 15. Telcom Kenya and Anor Vs CAK- • 16. Evans Aseto & another v National Bank of Kenya (NBK) & another; Central Bank of Kenya & another (Interested Parties) [2019] eKLR • 17. How NBK was brought to its death bed • 18. KCB offers to acquire NBK • 19. KCB changes acquisition plans with NBK • 20. KCB pump 5 billion capital into NBK 5/19/2024 WAKIMANI 47

Editor's Notes

  1. One curious observation in the merger is that physical assets, data platform and money transfer services are outside the scope of the merger. So is it just symbolic. Duopoly they could collude to keep the prices up. Job losses could be another bump on Telkom-Airtel merger. Mergers are not unique to Kenya. Mergers and acquisitions are characteristics of industries about to mature or brimming with innovations. 148 merger notifications were received by Competition Authority of Kenya during the 2017/2018 financial year. Banking and insurance sectors are popular.