Nakumatt Supermarket has signed a deal with Tuskys in a move aimed at preventing a total collapse of the cash-strapped company.
The merger will see Nakumatt access stock from suppliers using Tuskys supermarkets' goodwill and value chain.
The two will be maintained as separate entities, but Tuskys will take over the management of Nakumatt.
According to sources close to the deal, the Atul Shah family will pledge their shares to financiers for a six-year period.
The position of Tuskys in the retail market will surely be strengthened as Nakumatt was it's biggest competitor. Nakumatt has been faced with financial woes that have seen stores shut down as customers are met with empty shelves.
It was revealed in July that the company was almost collapsing under the weight of a massive Sh30 Billion debt.
Suppliers were owed Sh15 Billion, while 10 commercial banks were hunting them down as they were owed Sh8 Billion. The company also faced a bill for commercial paper that ran upwards of Sh7 Billion.
Nakumatt was most recently forced to shut down it's Nextgen Branch along Mombasa Road.
The regional retail giant has also faced a hard time outside Kenya, with the Uganda Revenue Authority (URA) auctioning their goods as they seek to recover $71,000 owed in taxes.
Employees of the supermarket have been staging protests at its Industrial Area headquarters over late payments of their salaries. It is hoped that the deal will improve their working conditions and secure their jobs.
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