Business

Govt allays fears in De La Rue takeover

Govt allays fears in De La Rue takeover
  • Competition Authority of Kenya last week approved the proposed acquisition of 100 per cent of the issued share capital of De La Rue Kenya Limited by HID Corporation Ltd

  • The government took a 40 per cent stake in the multinational’s local subsidiary (De La Rue Kenya EPZ Ltd) in 2018, paying £5 million (Sh654 million).

The acquisition of a De La Rue PLC subsidiary by American firm, HID Corporation Ltd, will not affect the currency printing unit in Kenya, officials said Wednesday.

The Competition Authority of Kenya (CAK) has clarified that the subsidiary being sold is De La Rue Kenya Limited which focuses on printing a wide range of security documents such as debit and credit cards and a wide range of electronic government identity solutions (passports and national identity cards),

JOINT VENTURE

The unit that prints currency is De La Rue Kenya EPZ Limited (DLR), which is a joint venture between De La Rue PLC of UK and Kenya's national Treasury respectively. The National Treasury holds a 40 per cent stake in DLR while De La Rue PLC holds the remaining 60 per cent.

“In Kenya, the acquirer (HID Corporation) and target (De La Rue Kenya Ltd) both supply electronic government identity solutions (passports and ID cards) to Kenyans,” CAK said in a statement.

De La Rue Kenya Ltd which is being acquired by HID Corporation is “controlled by De La Rue PLC” with no Kenya government stake in the company.

“It is important to note that DLR is not part of the proposed transaction and will continue with its ownership and operation (of printing of currency in Kenya),” the Authority stated.

CAK last week approved the proposed acquisition of 100 per cent of the issued share capital of De La Rue Kenya Limited by HID Corporation Ltd “on condition that all the contracts that the target (De La Rue Kenya Limited) has with the government of Kenya are honoured.”

The announcement was contained in the Kenya Gazette Notice No. 8122 which came out on Friday.

De La Rue in June announced on its website that “it has agreed the sale of its International Identity Solutions business (‘International ID’) to HID Corporation Limited (‘HID Global’), an ASSA ABLOY Group company, for a cash consideration of £42 million (Sh5.3 billion) on a cash free debt free basis, payable upon completion.”

“After assessing all options, we believe that exiting the end to end identity solutions market is the right one for the Group and will deliver the most value to shareholders. Focusing on the identity-related security features and components is in line with our strategy to transform De La Rue to an asset light and more technology-led business. This transaction strengthens our balance sheet and allows us to focus on the other strategic growth areas of Security Features, Polymer, and PA&T,” De La Rue’s CEO, Martin Sutherland, had said back in June.

In the statement, CAK says the approval was granted on sound reasoning that both De La Rue Kenya and HID activities’ overlap in the provision of electronic secure printing solutions, that both firms offer their services within Kenya and therefore the relevant geographic market for the transaction is national, and that post-merger, the new entity will have a market share of less than 15 per cent in each of the markets for supply of e-passports, e-ID and e-Government identity solutions and thus the merge will unlikely to raise competition concerns.

“Further, it is the Authority’s view that the merged entity will continue facing competition from other global participants in the market for provision of electronic secure printing solution,” CAK said.

CAK also said it had obtained an undertaking from the two entities that no employees will be affected negatively by the transaction.