Africa-Press – Botswana. Choppies board of directors have confirmed that the company’s audit committee has approved the acquisition of the controlling stake in Kamoso Group, and determined that the terms of the proposed transaction are fair, with Choppies paying a discounted price by taking on Kamoso’s debts.
Choppies, through its wholly owned subsidiary Choppies Distribution Centre, acquired 76 percent of the issued ordinary shares of Kamoso for P2 and take cession of the existing shareholders loans to the value of approximately P28 million at the proposed acquisition date.
“The parties to the proposed transaction considered the net asset value of the Kamoso group as key factor in arriving at the consideration. Ultimately the consideration was a negotiated outcome between the parties. The consideration will be settled from cash resources on the closing date,” Choppies board of directors said in a statement released this week.
According to the business valuation done by Grant Thornton Capital Advisors, Kamoso’s enterprise value was P340 million, but with debt of P161 million, this value fell to P179 million. Moreover, factoring in the discount of P27 million, the value of Kamoso was reduced to P152 million.
Post-acquisition, Choppies’ 76 percent share in Kamoso has been valued at P116 million, a significant difference to the 24 percent held by Botswana Development Corporation (BDC), which were acquired for P239 million in 2020.
Choppies says it will be able to return Kamoso to profitability following three years of losses. The company recorded a P188 million loss in 2019, then narrowed losses to P86 million in 2022. However, Kamoso’s loss for this year is forecasted to grow to P109 million.
Besides plans to turn around Kamoso’s fortunes, Choppies’ board explained that the acquisition will give the retailer a foot in other business areas.
“Kamoso has a well-established and dominant liquor business. Choppies Botswana is the only one of the four countries that does not have a liquor business and is the only major grocery retailer in Botswana without a liquor business,” according to the statement.
Moreover, the board said Kamoso’s well-established hardware business integrates into their current strategy of expanding into hardware, targeting the rapid urbanisation which has resulted in the demand for housing and infrastructure.
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