The Comesa Competition Commission has granted its unconditional approval for a share purchase agreement, allowing Africa Capitalworks to acquire Cipla’s stake in Quality Chemical Industries.
The share purchase agreement, which was originally announced in April and anticipated to conclude in May, encountered delays exceeding four months due to regulatory processes. This delay was primarily associated with the Capital Markets Authority (CMA) and the Comesa Competition Commission, where Africa Capitalworks had been seeking authorization to support regional self-sufficiency by bolstering one of sub-Saharan Africa’s largest lifesaving drug manufacturers, thereby accelerating its growth in Uganda and the broader region.
Dr. Mahmoud Momtaz, Chairperson of the three-man Committee Responsible for Initial Determination, emphasized that the merger would not substantially hinder competition within the Common Market or any substantial part of it, nor would it be against the public interest. The Committee also determined that the transaction would unlikely negatively impact trade between member states.
Back in July, Comesa had extended invitations to various stakeholders, including competitors, suppliers, and customers from both within and beyond the region, to provide their opinions regarding Africa Capitalworks’ proposed acquisition of sole control over Cipla Quality Chemical.
Operating under the rules established in the “Determination of Merger Notification Thresholds and Method of Calculation of 2015,” Comesa examines mergers and acquisitions to prevent anti-competitive situations. Their focus was on ensuring that the acquisition wouldn’t disrupt or distort the market in favor of Africa Capitalworks, considering its active presence in Comesa member states, including Uganda, Zambia, and Kenya, where it held market shares in the pharmaceutical sector of around 15 percent or less.
In August, insiders familiar with the matter indicated that the takeover deal, estimated to be valued between $25 million (Shs93.3 billion) and $30 million (Shs112 billion), would necessitate an extension of the transaction timeline for the third time. This extension was required to allow Comesa to conclude its investigations before granting regulatory approvals. The deal would involve Cipla divesting its 51.18 percent stake in Cipla Quality Chemical, held through Cipla (EU) and Meditab Holdings.
This transaction marks Cipla’s complete exit from the drug manufacturing company Quality Chemical Industries, which it had acquired in 2015.
It is worth noting that the Capital Markets Authority had already granted its approval for the transaction in April.