To add more than 10 % to Group’s total sales
* Becomes the group’s sixth reporting segment
* To quickly return the segment to full profitability
The acquisition of Liquorama by Choppies Group – as part of the Kamoso outfit – is set to be a game changer for the leading local retailer.
The liquor outfit brings to Choppies 68 stores nationally and stands to gain even more floor metres with the retailer likely to offer it space inside its 92 stores in the country – a business tactic that has been well exploited by some of its competitors.
Choppies directors more than confirm the value they see in Liquorama as a stand-out magnet that drew them to the Kamoso group.
“Other than Liquorama, no other sub-segment within Kamoso will exceed 10% of the Group. Liquorama will qualify as a separate segment i.e., it will meet the qualitative measure of more than 10% of total sales. So, post-acquisition we will have six reporting segments – Botswana, Namibia, Zambia, Zimbabwe, Kamoso Group, Liquorama,” the company said in a statement announcing the lifting of the cautionary note to shareholders as the acquisition process of the 76% controlling stake has advanced.
The remaining 24 per cent of the stake shall be held by the Botswana Development Corporation (BDC).
It continued: “The Company’s Audit Committee has approved the Kamoso Acquisition and determined that the terms of the Proposed Transaction are fair insofar as shareholders of Choppies are concerned. The fairness opinion prepared by the Audit Committee will lie for inspection at the Company’s registered office for a period of 28 days from the date of this announcement”.
Even more motivating for Choppies Botswana is that they are the only one of the 4-countries that does not have a liquor business and is the only major grocery retailer in Botswana without a liquor business.
The directors are convinced that they have what it takes to re-establish Kamoso back into a profitability trajectory.
“The Kamoso Group, when part of Choppies, will be able to achieve synergies in the short term which will allow the Group to return to profitability and achieve EBITDA margins of 4% to 6%,” they said.
The Kamoso Group fell into hard times in the last three years because of: • negative financial impact of Covid on the Group and its major customers • a demanding economic environment characterised by stubbornly high inflation, higher interest rates and unemployment, all of which continue to constrain consumer spending impairments • impairments relating to trade receivables, inventory, and goodwill • cash flow constraints in the business.
Other segments of the Kamoso group that Choppies is acquiring include – a milling business; pharmaceutical company; tissue packaging company; Water bottling; Building materials and supplies company with 27 stores and a ten-store alcoholic beverages company in South Africa.