Choppies plans to takeover Supersave

Giant local superstore, Choppies Enterprises, is planning to take over Supasave supermarket, BG Business has established. Choppies chief executive officer (CEO) Ramachandran Ottapathu was at qualms when BG Business contacted him on Wednesday evening wanting to establish whether the retailer was planning to take over Supersave. “I cannot talk to you about that. I am not at liberty to disclose matters that are still under discussions,” Ottapathu said.

Pressed further he reluctantly confirmed that they were in serious negotiations with a few parties, but would not specifically confirm that it was Supasave retail supermarket. Since the beginning of this month, the Botswana Stock Exchange (BSE) listed company has been announcing that it is engaged in some form of negotiations with a third party, of which if successful would significantly affect the company’s share price. Meanwhile, Competition Authority (CA) Communications Director Gideon Nkala confirmed receipt of a notice of such a merger. “We received the merger notice this week, and we have since been engaged in the relevant processes of mergers,” Nkala told BG Business Wednesday evening.

Nkala said since the process of assessing the merger was ongoing he was unable to comment further regarding the response until the Merger Reviews Committee has completed assessments and recommendations made. However he said based on the outcome of the Committee’s findings after assessment, CA could approve the merger, approve it with conditions or reject it. While Supasave controls just over 1 percent of the market, Choppies on the other hand controls well around 30 percent of the retail market. With the proposed merger Choppies is likely to control over 30 percent of the retail market, which is way over the 25 percent market-share dominance threshold according to the Competition Act.

A company controlling well over 30 percent of the market share is considered dominant by the CA and is likely to have its merger, rejected if the Competition Commission assessment finds that the company is likely to abuse its dominance by, for example, influencing product prices to its advantage, neglecting of environmental issues as well as the disadvantaging of employees and creating anticompetitive measures. However, a company according to CA can be dominant in terms of market share, but if it subscribes to pro-competitive measures and does not abuse the market in any way, then it is likely to be approved for merger by CA. Choppies has launched a vigorous expansion strategy that has seen the company-opening store after store in Botswana. Currently the company has around 65 stores in Botswana and well over 17 in South Africa, while plans are on course to expand its footprints to countries like Mozambique. By close of bell on Wednesday, Choppies shares traded at 301thebe per share.

Last modified on Wednesday, 31 July 2013 16:21

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