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The Competition Authority of Kenya has given a go-ahead for the acquisition of Naivasha-based flower firm Bigot Flower Kenya by the United Kingdom investment holdings company Flamingo Horticulture Investment Limited
This will now allow Flamingo to acquire the entire share capital of Bigot for an undisclosed amount.
The deal comes at a time that the flower industry is struggling, the margins shrinking by the day and growers struggling to supply the market and maintain Kenya’s position as a key producer of cut flowers and ornamentals.
While Flamingo is involved in the growing, processing, marketing, and distribution of roses and other cut flowers, Bigot grows, packages, markets, and distributes rose flowers.
“This approval has been granted based on the finding that the transaction is unlikely to negatively impact competition in the market for growing, processing, and exporting flowers, nor elicit negative public interest concerns, the two key considerations during merger analysis,” CAK said in a statement.
According to players in the sector despite the relative growth, the flower industry in Kenya requires a predictable and stable business environment.
Kenya Flower Council says the numerous hurdles currently facing the industry could see exports of flowers and ornamentals shrink by between 10,000 to 15,000 tons this year from 21,000 tons exported last year.
During the merger, CAK considered the extent to which a proposed merger would impact employment opportunities and the competitiveness of SMEs.
Other factors were the impact on particular industries or sectors and the ability of national industries to compete in international markets.
“As per the parties’ submissions, this transaction will not elicit negative public interest concerns. Specifically, the target’s 1,000 employees will retain their employment under the same terms. Premised on the above, the Authority approved the proposed acquisition of the entire issued share capital of Bigot Flowers Kenya Plc by Flamingo Horticulture Investments Limited unconditionally,” CAK added.
Rising inflation globally last year saw flower prices drop in the international market despite the rise in volumes exported where Kenya lost Sh20 billion between 2021 and 2022.
The Council said taxation coupled with high freight rates has seen a decline in the volume of flower exports.
On average, growers are paying up to 45 levies between the national and county governments which they say impact negatively on the sector threatening jobs and livelihoods.
According to the Economic Survey 2022, the value of horticulture exports in 2021, including cut flowers, was Sh157.7 billion.
The marketed value of cut flowers in the year under review was Sh110.8 billion.
Kenya is the leading exporter of rose cut flowers to the European Union (EU), with a market share of 38 percent.
Approximately 50 percent of exported flowers are sold through Dutch auctions, although direct sales are increasing.
In the United Kingdom, supermarkets are the main retail outlets. Kenyan flowers are sold in over 60 countries. BY THE STAR