‘Due diligence key in mergers and acquisitions’
Mr Charles Ocici, the executive director Enterprise Uganda
What you need to know:
The Act is supposed to guide, with consultation of other statutory bodies, the process of mergers and acquisitions.
The Competition policy seeks to encourage and improve the competitive process, and to ensure consumers feel the benefits of that process. These goals are achieved in practice through Competition Law.
Kampala.
A wave of mergers and acquisitions (M&A) have taken place in Uganda in the last two years as companies look for ways to protect their market share and ensure better returns for shareholders.
Most of these deals are in the financial, telecommunications, industrial and health sectors.
Experts in the field say the changing economic fortunes over the past two years have seen struggling companies look for partners in a bid to raise new capital, create synergies and build economies of scale to tackle increasing competition.
Mr Charles Ocici, the executive director Enterprise Uganda, said different institutions seek M&A in a bid to scale up and also grow market share.
“The first benefit of M&A is that you enter a market and you have visibility. The moment AB that bought in to SABMiller came in there was a surge in growth of Nile Breweries,” he told Daily Monitor.
Mr Ocici said recent acquisitions in the market have led to an increase in returns for companies. The benefits as a result of synergies are enormous.
For instance in the banking sector, Barclays bought into Nile Bank, dfcu Bank acquired Crane bank assets, and it has served to strengthen the positions of these banks.
Merging process
Before due any mergers and acquisitions are done, companies go through a due diligence process to make sure they have an appreciation of the business.
However, Mr Ocici said before any mergers and acquisitions are completed, companies carry out due diligence on the market they intent to enter and also the companies that they seek to buy.
“Nobody goes to buy into an entity without doing due diligence,” Mr Ocici says.
“You must fulfill certain minimum requirements. For instance in the banking sector, there are regulatory requirements that you must fulfill before you get in to any transaction of sorts,” he added.
Uganda, unlike Kenya, does not have a competition law. Mr Silver Ojakol the commissioner external trade at the ministry of Trade says under the EAC, we have the Competition Act.
“However, we have the Comesa Competition Authority which handles matters regarding Mergers and Acquisitions. In Uganda we have developed a policy awaiting Cabinet approval to be able to be sent to the floor of Parliament lop a Competition and Consumer protection Act,” he says.
The Act is supposed to guide, with consultation of other statutory bodies, the process of mergers and acquisitions.
The Competition policy seeks to encourage and improve the competitive process, and to ensure consumers feel the benefits of that process. These goals are achieved in practice through Competition Law.
He said: “We have a Competition and Consumer Protection bill that is being developed will cater for the mergers and Acquisitions and also supervise the process.”
