The Competition Authority of Kenya has granted unconditional approval for Kitui Flour Mills Limited to acquire one hundred per cent shareholding in Rafiki Millers Limited.

The regulatory body, after a thorough analysis, concluded that the transaction poses no threat to competition in the wheat milling market and does not raise any negative public interest concerns.

"The Competition Authority of Kenya has approved the proposed acquisition of one hundred percent (100%) shareholding in Rafiki Millers Limited by Kitui Flour Mills Limited unconditionally," CAK said.

"This approval has been granted based on the finding that the transaction is unlikely to negatively impact competition in the market for wheat milling, nor elicit negative public interest concerns -the two key considerations during merger analysis."

Kitui Flour Mills Limited, the acquiring entity, is a Kenyan limited liability company known for its expertise in maize and wheat milling.

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Renowned for its quality products like Premium Maize Flour, Dola Wheat Flour, Dola Chapati Flour, Atta Flour, Baba Lao Maize Flour, Baba Lao Wheat Flour, Jahazi Maize Flour, and Jahazi Wheat Flour, Kitui Flour Mills Limited stands as a key player in the industry.

Rafiki Millers Limited, the target of the acquisition, is also a Kenyan limited liability company.

While it ceased operations in April 2021, prior to its closure, the company specialized in wheat milling and the confectionery business.

The proposed acquisition involves Kitui Flour Mills Limited acquiring 100 per cent of the issued shares in Rafiki Millers Limited, qualifying it as a merger under the provisions of Section 2 and 41 of the Competition Act No. 12 of 2010.

The Act defines a merger as the direct or indirect acquisition of control over another business within Kenya, encompassing scenarios such as the purchase/lease of shares, exchange of shares, or vertical integration.

Merging parties with combined turnover or assets exceeding Sh1 billion are mandated to seek approval from the Authority before implementing the transaction, a threshold met by the Kitui Flour Mills Limited and Rafiki Millers Limited deal.

During the meticulous merger analysis, the Authority determined the relevant product market as the wheat milling sector.

"Further, merging parties whose combined turnover or assets, whichever is higher, is over Ksh. 1 Billion are required to seek approval from the Authority prior to implementing the proposed transaction," CAK stated.

"The transaction between Kitui Flour Mills Limited and Rafiki Millers Limited met this threshold for mandatory notification and full analysis as provided in the Competition (General) Rules, 2019."

This involved identifying products or services interchangeable or substitutable by consumers based on their characteristics, prices, and intended use.

The relevant geographic market, in this case, was established as national, considering the areas in which the merging parties operate and where competition conditions are sufficiently similar.

This decision marks a significant development in the Kenyan milling industry, with Kitui Flour Mills Limited poised to strengthen its market presence through the strategic acquisition of Rafiki Millers Limited.

The competition watchdog's thorough assessment ensures that consumers can continue to enjoy the benefits of a competitive market in the wheat milling sector.

The transaction, now cleared by the Competition Authority, sets the stage for a new chapter in the operations of Kitui Flour Mills Limited, reinforcing its commitment to providing quality products and maintaining a competitive edge in the dynamic Kenyan market.