The Competition Authority of Kenya has approved the takeover of Gulf Energy by Kenol Kobil albeit with some conditions.
As per the Competition Authority, Kenol Kobil has has been barred from declaring any Gulf Energy Holdings Limited employee redundant for 24-months, after the transaction. They are also required to retain basic remuneration for all employees as well as employee benefits.
Also, Small and Medium Enterprises (SMEs) which have engagements with the merging entities shall enjoy the same benefits within the contract as provided at the signing of the contract.
The Authority also indicated that contracts entered into between Gulf Energy and the retail station dealers would be maintained for the length of such contracts.
Kenol Kobil was last year acquired by French firm Rubis Energie at a cost of Ksh. 35.6 Billion which saw the firm delisted from the Nairobi Securities Exchange.
Rubis finalised the acquisition of Gulf Energy Holdings Limited in December for an undisclosed amount. In the deal, Rubis Energie indicated that it had acquired all the issued shares of Gulf Energy Holdings Limited (GEHL), the special purpose vehicle holding the oil marketing assets and businesses of Gulf Energy Limited.
The transaction which was first announced on November 4, will see the merged entity become market leader with a combined market share of over 20 per cent. Data by the Petroleum Institute of East Africa shows Gulf will add its 5.8 per cent market share to KenolKobil’s 15.4 per cent. Prior to the acquisition, Total was the market leader controlling 16.4 per cent of petroleum sales followed by Vivo at 16.2 per cent.
The transaction, upon completion, will also increase the merged entity’s market share for Liquefied Petroleum Gas (LPG) to 13.5 per cent, coming third after Hashi’s 25 per cent market share and Total’s 21 per cent.
CAK indicated that whereas the transaction will lead to the merged entity gaining the market leader position, it will not confer a dominant position. Additionally, the merged entity will face competition from the other OMCs who control 78.8 per cent of the market.