Deacons Kenya, Woolworths Finalise Retail Joint-Venture

Woolworths

VENTURES AFRICA – Deacons Kenya has entered into a joint venture agreement with Woolworths, in a move by Woolworths to attain better retail control over its products as it continues its pan-African expansion.

The finalised joint-venture – to be known as Woolworths Kenya Proprietary Ltd – will involve Woolworths taking a majority stake, while Deacons will also own a proportion of shares; although both parties have remained secretive about the deal, the exact details of which have not yet been revealed.

“Director of Deacons Kenya wish to inform shareholders that the company on 10th December 2012 entered into a conditional agreement for the sale of its Woolworths retailing business to Woolworth’s Kenya Proprietary limited,” Peter Njoka, Deacons’ Chairman announced.

The deal sees Woolworths continue in its eradication of its previously used franchise business model- which began to prove too complex and costly to properly manage as operations expanded across the continent -, and turn to partnership-based deals in line with its increasingly visible strategy; the company having recently entered into similar agreements regarding Tanzanian and Ugandan operations.

“By moving into a partnership model, we are going to be getting more involved in the retail side of the operations,” John Fraser, Woolworths’ executive for international business explained earlier this year, according to Business Daily.

“We will be working a lot closer with our partners in terms of ensuring we’ve got . . . the right product ranges in each of those environments and trying to ensure that the in-store experience you get in (the rest of) Africa is the same as if you were in South Africa,” he reportedly added.

Meanwhile, Deacons – which plans to list on the Nairobi Stock Exchange in the near future – will through the partnership be able to guard its position linked to big brands such as Mr Price and Truworths, which contribute considerable earnings to the company.