Sunday, May 22, 2022

Woolworths given go-ahead to purchase back Botswana franchises

Woolworths Group, a top South Africa’s retailer, has been given the go-ahead to purchase back all of its franchised stores across the country by the Competition Authority (CA).

The move to get back 22 stores spread across the country will mark the end of franchise business in Botswana as well as other African countries such as Namibia where the group has similar operations.

Competition Authority Chief Executive, Thula Kaira said they determined to ‘conditionally’ authorise the proposed transaction on the grounds that the analysis of the facts of the case showed that there were no substantive competition concerns that will arise in the retail markets for clothing, food and hardware markets in the country.

He stated that his team of investigators believe that the move is not likely to result in substantial lessening of competition, nor endanger the continuity of service, due to the absence of geographical overlap between the activities of the merging parties in the domestic market.

“Similarly, the implementation of the proposed merger is not expected to result in the merged entity attaining a dominant position, as the transaction is not expected to affect the current market structure,” Kaira said.

Woolworths owns a combined number of up to 33 stores through franchise agreements in Botswana, Namibia, Swaziland and Ghana, which the group figures shows that has in the past made a combined annual turnover of over one billion pula.

The franchise stores have, over the years been managed by Ish Handa, who is expected to become a non-executive director of Woolworths in both Botswana and Namibia on conclusion of the deal. Meanwhile, the Competition Authority added that the Woolworths Group will determine the commercial viability of implementing the appropriate aspects of its ‘Good
Business Journey’ plan in the local economy once it acquires the 22 Woolworths franchise stores in Botswana, and thereby facilitating citizen participation in the Group’s Business.

The Authority claims that the Woolworths Group is further committed to doubling its sourcing from Botswana suppliers over the next two years, based on the value of its own current sourcing from Botswana suppliers, as well as, the current sourcing of Pinks Family Botswana. 

Kaira says that subject to these commitments, and pursuant to the provisions of section 55 of the Competition Act of Botswana, the Authority has approved the acquisition of 100 percent controlling interest in Pinks Family Outfitters by Leapingeagles Investments (Woolworths Group).

It is expected that the merged entity will submit to the Authority within one year from the date of authorisation, a program of how they intend to roll out the Good Business Journey Strategy in Botswana. 

Two years ago the group hinted on plans to regain control over its franchises, saying it did not wish to be both a franchiser and an operator.

The Woolworths group, like other retailers, plans to expand its footprint on the African continent as urbanisation and rising affluence fuel a boom in fast-growing cities, with a middle class clamouring for high-quality goods.

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