The competition authorities have approved the merger of two of South Africa’s biggest e-retailers. Takealot.com and Kalahari.com said on Tuesday that their merger deal had been given the go-ahead by regulators.
The decision was handed down on Monday, the companies said in a statement, and the merger will become effective on 1 February.
However, in terms of the approval by the Competition Commission, no more than 200 employees may be retrenched as a result of the merger. A training and re-skilling fund will also be established to support the affected employees.
TechCentral reported in October that the two longstanding e-retail adversaries had agreed to merge. Kalahari, owned by JSE-listed media and e-commerce group Naspers, will be folded into Takealot, which last year secured US$100m from investment firm Tiger Global Management.
Under the deal, the value of which has not been disclosed, Naspers is acquiring shares from Tiger Global such that the two companies have an equal shareholding in the merged business. They will each hold about 41% of the equity.
“The move was driven by the fact that, without scale, South African e-retailers simply can’t compete successfully against the local brick-and-mortar retailers and foreign companies such as Amazon and Alibaba,” the companies said in the statement when the proposed deal was first announced.
“After many years of losses on Kalahari and four years [of losses] on Takealot, we realise we have to work together if we are to survive and prosper,” said Oliver Rippel, senior executive responsible for Kalahari.
“If you also take into account an uneven playing field against foreign operators who do not pay tax in South Africa, and the fact that high broadband costs are impeding the speed of growth in local online shoppers, combining forces gives us a better chance of success.”
The companies said online retail accounts for only 1,3% of the total market for consumer goods in South Africa. “The channel has great upside potential when one considers that in developed markets like the US and the UK online retail accounts for as much as 14% of total retail of consumer goods.”
Takealot co-CEO Kim Reid said on Tuesday that the merger will allow the combined company to build a “significant retail entity in South Africa”.
With the merger of the two businesses, a single platform of scale will be created to take advantage of the significant growth opportunities in online retail in South Africa, the companies said.
“This is a necessary step in the evolution of online retail in South Africa and exciting news. The South African e-retail market is a highly dynamic one, and we foresee significant growth in the future,” said Oliver Rippel, senior executive responsible for Kalahari, in the statement.
The newly formed e-commerce market leader will eventually trade under the Takealot.com brand, using Takealot’s platform and technology, and will be led by Reid and co-CEO Willem van Biljon. — © 2015 NewsCentral Media