Kenya Auto Dealer CMC Receives Approach for Possible TakeoverJohnstone Ole Turana
CMC Holdings Ltd., the Kenyan auto dealer whose shares were suspended from trading almost two years ago because of a board dispute, received an approach about a possible takeover, Chairman Joel Kamau Kibe said.
“The decision to either offer a takeover or invest as a strategic investor will depend on the outcome of the due diligence,” Kibe told reporters in Nairobi today. He didn’t give a timeframe for any action.
CMC shares were suspended from trading at the Nairobi Securities Exchange in September 2011 amid a probe into a dispute between directors. CMC’s stock last traded at 13.50 shillings, valuing the company at 7.87 billion shillings ($92 million).
“We are in the process of settling all outstanding issues among them, all cases pending in court, to ensure the continued viability of the company businesses,” Kibe said. CMC is implementing a turnaround plan that will result in a “major transformation,” he said in a statement.
CMC lost an exclusive franchise for Jaguar Land Rover sales in Kenya and Uganda last year. It accounted for 23 percent of last year’s sales, according to the company. Other franchises include Volkswagen, Mazda, Ford, Suzuki, Nissan Diesel and MAN trucks. CMC also sells agricultural vehicles.
CMC’s profit fell 62 percent to 147.5 million shillings in the six months through March, while sales rose to 6.9 billion shillings from 6.38 billion shillings. The company sold 1,258 vehicles in the fiscal first half compared with 1,140 a year earlier, it said on May 30.
“The business performance for the first six months shows a marked improvement in turnover and profitability, and the outlook for the remainder of the year is promising,” Kibe said. “The company is seeking to aggressively increase market share both locally and in the region, with immediate focus on operations in South Sudan.”
CMC, Kenya’s fourth-biggest car dealership by sales, had an 11 percent market share in the first five months of 2013, according the Kenya Motor Industry Association, an industry lobby group. CMC’s vehicle sales rose 24 percent in that period.