A multi-billion beauty company that distributes weaves and hair extensions within the country has exited the Kenyan market after selling a portion of its assets to a newly incorporated company.
This was announced by the Competition Authority of Kenya (CAK) on Monday, February 11, in a statement approving the sale.
CAK was involved in the sale due to a legal requirement that mandates the Authority to be involved in transactions where the combined turnover or assets, whichever is higher, is over Ksh1 billion.
With the sale expected to go through, hundreds of Kenyans who were working in the company are now set to be retrenched.
“The transaction will elicit negative public interest concerns. Specifically, it will lead to the loss of 652 jobs which is equivalent to 30 per cent of the target's 2,171 employees,” CAK revealed in its statement.
The company until its sale was controlled by a consumer products company registered in India.
To cushion 70 per cent of workers who will now be working in the new company, CAK directed that they should not be subjected to a salary reduction in a period of 12 months.
“The Competition Authority of Kenya has approved the proposed acquisition on condition that at least 70 per cent of the target firm's employees are retained on employment terms that are no less favourable than their current terms for 12 months following completion of the transaction,” CAK announced.
CAK noted that while the transaction would not negatively impact competition in the hair extensions and wigs market, it would elicit public interest concerns.
There will be no disruption in the market since the sale of hair extensions and wigs is largely fragmented.
According to CAK, in 2022, the company controlled Ksh4 billion of the Ksh80 billion revenue in the wigs and weaves industry.
Considering the company was controlling 5 per cent of the industry, it was noted that its exit would not change the structure and concentration of the market.
CAK argued that the newly incorporated company will be able to take over the 5 per cent share of the market that is being left by the exiting company.
“Additionally, the target will continue to face competition from other players controlling 95 per cent of the market,” CAK explained.
