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Takeover of KenolKobil on the rocks as workers move to court

BUSINESS
By Kenneth Kwama and Morris Aron | June 25th 2012

By Kenneth Kwama and Morris Aron

Switzerland-based oil company Puma Energy’s quest for a takeover bid for KenolKobil could stall following a move by the local company’s employees to stop the process through court.

The Standard has reliably learnt that the employees, acting through Nairobi law firm — Rachier and Amollo advocates, will this morning file a motion seeking to stop the process. This move could potentially stop the biggest corporate acquisition in the country’s history.

The deal is reportedly worth $500 million (Sh42 billion) and could stall should the Industrial Court decide issues raised by employees form sufficient grounds to stop the bid.

This will happen even as it emerged that the company could have technically changed hands last Wednesday when top executives from Puma jetted into the country in a private jet to conclude the deal.

Puma and KenolKobil appear to have sidestepped a commitment made before the Industrial Court, in which the employees allege KenolKobil undertook to have concerns over job security and employee benefits addressed by Friday this week, before the take-over is finalised.

“We understand that the company has technically changed hands, while our issues as to how we will be relating to the new company have not been addressed,” said an employee who asked not to be named for fear of victimisation.

Terms and conditions

“There is concern that employees may be sent home without their benefits or employed under different terms and conditions.”

While admitting that a group from Puma had indeed jetted into the country last week, the company’s Chairman and Group MD Jacob Segman said this should not be seen as untoward.

“They have been visiting regularly for the last six weeks. A lot has happened and due diligence, which has been going on for some time now, will be completed next week,” said Segman in a telephone interview with The Standard last Saturday. 

A source from the company, who also declined to be named, said its employees were shocked to learn that the take-over bid is ‘technically done’, even while the grievances have not been addressed.

By the time the Puma officials jetted into the country last week, KenolKobil shares had resumed trading at the Nairobi Securities Exchange after a brief suspension.

Segman, who disclosed that he was not aware of any out-of-court deals with employees, said that Puma and KenolKobil will make a major announcement regarding the take-over bid this week.

Exclusive talks

The company’s shares were suspended from trading on May 9, after its major shareholders entered into exclusive talks for the sale of their shareholding to Puma Energy, a subsidiary of Trafigura Beheer.

Capital Markets Authority took the decision, stating that the take-over needed to be addressed first before being allowed to trade at the NSE, as the take-over could easily result in KenolKobil being a private company.

An earlier communiqué from KenolKobil to partners and shareholders indicated that Puma Energy also plans to buy off minority shareholders through a mandatory general offer.

KenolKobil has 400 service stations across the country. It also operates in 10 other African countries, mostly eastern and central Africa.

Puma Energy that stands to gain immensely through an increased footprint as well as market for its products.

The firm has in the recent past been aggressively pursuing a growth and expansion strategy in Africa and so far has operations in 13 African countries, where it runs storage facilities and retail outlets.

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