The Competition Authority of Kenya (CAK) recently approved KEDA (Kenya) Ceramics Company Limited’s acquisition of specific assets of Ramoda Ceramics Limited.
This represents a notable shift in the competitive landscape of the market for ceramic floor and wall tiles, a sector that has experienced substantial growth in recent years, driven by factors such as urbanization and increased construction activities.
KEDA, a prominent player in the manufacturing, sale, and distribution of ceramic tiles in Kenya, will acquire key assets, including a number of properties, plants, and various categories of machinery and equipment, from Ramoda.
This follows Ramoda facing financial and operational challenges that led to its closure. The acquisition acts as a lifeline to revitalize Ramoda’s operations for future growth and profitability.
The Competition Authority’s approval is based on a thorough analysis concluding that the merger is unlikely to harm competition in the ceramics market. Even with KEDA’s market share increasing from 25% to 31% after the merger, it remains below the threshold for market dominance as outlined in the Competition Act.
With competitors still holding 69% of the market share, it is clear that the merger will not unduly restrict competition or lead to monopolistic behavior, which could have detrimental effects on consumers and other industry players.
The current dynamics of the ceramic tiles market in Kenya reveal a competitive landscape where various entities coexist. Importers currently dominate with a substantial 57% share, but local manufacturers like KEDA, SAJ Ceramics, and Ramoda also have a strong presence. This diverse marketplace offers consumers a wide range of choices.
KEDA’s acquisition of Ramoda’s assets has the potential to further stimulate competition, driving innovation and enhancing customer service. The merger is expected to have positive public interest implications, with a particular focus on employment.
According to KEDA’s submissions, reopening Ramoda’s mothballed plant could create around 500 new jobs, significantly contributing to both local and national economic recovery efforts following disruptions from global challenges.
The merger positions KEDA well to capitalize on the growing demand for ceramic tiles in Kenya. With an annual consumption of around 40 million square meters and a growth rate of approximately 8%, the sector is thriving due to rapid urbanization and infrastructure development.
Additionally, the continued popularity of home renovation projects is fueling further growth in this market. Thus, KEDA’s strategic acquisition not only positions it for strong post-merger performance but also aligns it with the evolving needs of the Kenyan market.
