Vodacom Group has said it will appeal a Kenyan High Court ruling that invalidated its acquisition of a 15 per cent stake in Safaricom and ordered the shares to be returned to the Kenyan government.
The court ruled on Tuesday that the sale breached Kenya’s public-finance laws and failed to meet public-participation requirements.
Vodacom said it would challenge the decision at the Court of Appeal and seek a stay of the ruling pending the outcome of the appeal.
“As interim steps, Vodacom will lodge an appeal against today’s decision with the Court of Appeal and will also apply for a stay pending the determination of the appeal,” the company said.
The ruling sent Vodacom shares down nearly four per cent in Johannesburg trading before the stock recovered some of the losses. Safaricom shares, meanwhile, rose as much as 2.2 per cent during trading in Kenya.
Judges Francis Gikonyo, Roselyne Aburili and Tabitha Ouya said the transaction was “invalid, null and void” and ordered the 15 per cent stake to be restored to the Kenyan government.
The judges said key transaction documents, including the share-purchase agreement and an agreement covering future dividend rights, were not made available for public scrutiny.
They also questioned the absence of a competitive process in the selection of Vodacom as the buyer and said the transaction effectively transferred control of a strategic national asset to a foreign shareholder.
Vodacom agreed in December to acquire an additional stake in Safaricom from the Kenyan government, increasing its holding to about 55 per cent from nearly 40 per cent. The transaction reduced the government’s stake to 20 per cent.
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The court also found that the parties had not sought an exemption from takeover requirements and that there was no evidence that Kenya’s Competition Authority had approved the transaction.
The sale generated about 204.3 billion Kenyan shillings ($1.6 billion) for the government, while a further 40.2 billion shillings was raised through the securitisation of future dividends.
Vodacom said the transaction was completed on June 30 after a conservatory order was lifted by the Court of Appeal and all conditions required for completion had been met.
If Vodacom’s appeal fails, the Kenyan government could face the prospect of refunding about $1.9 billion already received from the transaction.
About the Author
Cecilia Attah is a tech analyst with a degree from Benue State University. She covers tech news and startups at TechRegard with a focus on how technology is transforming Africa and shaping the global landscape.
