The anticipated “merger of equals” between Kenya’s Wasoko and Egypt’s MaxAB, two prominent players in African eCommerce, has encountered some delays. The merger, which has been in negotiation for seven months, is facing a slowdown due to a prolonged due diligence process, ongoing internal restructuring, and various macroeconomic challenges.
Despite these setbacks, the merger, which is supported by a robust $240 million in funding and is hailed as one of the largest in African eCommerce, is reportedly still on track. The companies are continuing to work through the details of the merger, which includes a reassessment of ownership stakes. Initially, the agreement stipulated that Wasoko would hold a 55% stake, while MaxAB would own 45%, with these percentages based on their respective revenues at the end of 2023. However, the devaluation of the Egyptian pound may necessitate a reevaluation of these terms, particularly as MaxAB is eager to finalize the deal in light of its limited financial runway.
The backstory of this merger began in December 2023 when both companies agreed in principle to unite in order to expand their market reach within Africa and to implement cutting-edge technologies.
Despite their status as well-funded entities in the eCommerce sector, both companies announced in January 2024 that they would be reducing their workforce by approximately 10%.
Operational changes have also been a part of Wasoko’s recent strategy. The company ceased its operations in Zanzibar, Tanzania, and put a hold on its activities in Uganda and Zambia in March. However, Wasoko refuted claims that it was exiting the Rwandan market in April.
In a related development, VNV Global, a Swedish investment company, significantly devalued its investment in Wasoko by 48%, bringing the fair value estimation of the company down to approximately $260 million.
Upon the finalization of the merger, the leadership roles have been delineated: Daniel Yu, the CEO of Wasoko, will be responsible for investor relations, human resources, and fundraising efforts. On the other hand, Belal El-Megharbel, the CEO of MaxAB, will manage internal operations, including technology and day-to-day operations.
