Tuskys, a regional retailer is merging with injured Nakumatt Supermarket, in a bid to rescue its dwindling business. The two arch-rivals signed a merger deal which will see Nakumatt, the biggest retailer in Kenya, access stock from suppliers using Tuskys supermarkets' goodwill and value chain.
Although the brand will remain the same, Tuskys will provide managers to offer leadership to the hitherto struggling Nakumatt stores across the region.
Kenyan media is reporting that Nakumatt Chief Atul Shah and his family have agreed to pledge his shares for six years to the financiers with the hope that this will offer a solution to Nakumatt financial challenges.
"This is a home-grown solution. The deal will allow Nakumatt access stock immediately and once it has stock then it can get the cash flows to remain afloat," One source familiar with the deal is quoted by Kenyan Media.
Nakumatt has been faced with financial woes that have seen several stores close down both in Uganda and Kenya, as day by day, the shelves were becoming emptier. It was revealed that the company was collapsing as a result of multi-billion Shillings debts to suppliers, banks and tax bodies.
Days ago, it was reported that Uganda Revenue Authority had commenced the auctioning of Nakumatt Supermarket's goods to recover USD 71,000 (2.5 billion Shillings) owed in taxes with clearance sales at Bugolobi and Kamwokya held last week.
Besides the recovery by URA, Nakumatt has been sued by a number of suppliers demanding payment. They include Britannia Allied Industries Limited, a leading food and beverage manufacturer who sued the retailer over unpaid debt amounting to 302 million Shillings, State Minister for Veteran Affairs, Bright Rwamirama, demanding payment of over two billion Shillings. Rwamirama owns Multiplex Complex which housed the Nakumatt Branch in Mbarara, Western Uganda.
The cash-strapped retailer closed stores at Acacia Mall in Kololo, Village Mall in Bugolobi and at Victoria Mall in Entebbe. Knight Frank Uganda, the property manager of malls that housed the shut Nakumatt outlets said: "the supermarket space at these malls will go under redevelopment."
Earlier, in April, Nakumatt closed its Katwe branch after it accumulated over 290 million Shillings in rent arrears. The Mbarara branch was closed in August over accumulated rent arrears.
