Tuskys is facing its latest round of troubles from within the family. One of the seven siblings, Yusuf Mugweru has vowed to block the sale of the retailer’s majority shares to a consortium consisting of an undisclosed foreign retailer and an equity fund.
In a bit to raise funds and win back suppliers’ confidence, KahawaTungu reported last week that Tuskys was already in talks with financial experts and a Strategy adviser as it seeks to sell a majority stake.
However, the deal seems to have hit a snag as one of the siblings has vowed to block the deal until the wrangles among the shareholders are resolved.
Yusuf is the 4th born of the seven siblings who own the retailer, with a 17.5 percent stake in the business. He claims that his brothers are yet to disclose the whereabouts of some Sh1.6 billion that was the subject of a previous court suit. He is also demanding a forensic audit of the business finances for the last eight years.
“They reached out to us last Sunday to support the share sale, but we have declined unless past problems are resolved,” Mr Mugweru’s lawyer, Philip Murgor said.
“A transaction in the nature of a buyout cannot be contemplated, without the express and written approval of all shareholders. Our client has not consented or approved such a transaction.”
In February 2012, after some investigations, Mr Mugweru raised the alarm over the theft of funds from Tuskys accounts.
The accusation saw Mugweru’s brothers, Stephen Mukuha and George Gachwe charged with the theft of Sh1.64 billion from the Super Market chain.
High Court Judge George Odunga threw out the case in November 2013, asking the siblings to settle the matter out of court.
The family feud roped in third generation heirs, sparking public and private outrage that threatened the business.
“The differences persist and we cannot proceed with the share sale deal unless settled,” said Mr Mugweru.
The prospective equity investors require that all the Tuskys’ seven shareholders agree and make legal commitments to the sale of a majority stake in the company. Mr. Mugweru’s objection will frustrate the efforts in place and could dash any hopes of future recovery of the troubled retailer.
“The board is working to obtain an irrevocable letter of undertaking signed by all shareholders and backed by power of attorney to make this process flawless and to enable equity injection in the shortest time possible,” Tuskys informed its major suppliers, who are owed billions of shillings, in a meeting last week.
The new investors are wary about committing resources and entering into a deal that could be scuttled by insiders. They are also wary of working with an aggrieved shareholder who could rock the boat from within.
The uncertainty stems from a previous fallout where Mr. Mugweru scuttled a merger deal between Tuskys and cash-strapped Nakumatt in 2018.
The seven siblings took over ownership of the Super Market chain following the death of their father Joram Kamau, in 2002.
According to disclosures in a previous court session, Mr. Mukuhe, Mr. Mugweru, Mr. Gachwe and Mr. Gatei own a 17.5 percent stake each while John Kago, Mary Njoki and Mary Njeri (deceased) own a 10 percent stake each.
Details of the proposed sale and how much capital will be raised from the transaction have not been divulged.
The company disclosed to suppliers that more prospective investors had already reached out and they were in discussion.
“There are now firm offers from credible international investors and two more are expected over the weekend,” the company said.
“The offers will be tabled to the board, the family and bank, with an expectation of an approval quickly. Board and advisers are clearly aware of the pressure to close quickly.”
If successful, the proposed sale of the majority stake will be the latest share deal in the supermarket business that has become increasingly competitive and capital-intensive.