Kenya: Finlays sells part of its Naivasha flower business

UK agro-based firm James Finlays has cut back on its Kenya flower business after selling part of the unit to a local company. The move comes five years after Finlays bought out rival Homegrown. The firm, which also deals in tea, property and aviation, has sold part of its flower business in Naivasha to Lamorna Limited for an undisclosed fee at a time when the value of flower exports grew 11.27 per cent to Sh57.9 billion as of November 2012.

The deal was signed five years after Finlays acquired Homegrown, another UK firm that had invested heavily in Kenya’s horticulture sector, to gain a piece of the flower business that was enjoying double digit growth.

The transaction has been approved by the Competition Authority but promoters of the buyout by Lamorna refused to comment for this story on grounds that the deal is yet to be closed.

“...the Competition Authority authorises the proposed acquisition of assets by Lamorna Limited from Finlays’ Horticulture Kenya Limited’s business of growing flowers,” said Wang’ombe Kariuki, the authority’s acting director-general in a Gazette notice.

Finlays’ local interests include flower farms in Mount Kenya, Naivasha and the Western Highlands, which serve its main markets of UK, USA and Asia.

Lamorna, which is wholly owned by UK’s Swire Group, also has extensive tea interests in Kenya, South Africa, Sri Lanka and China over and above horticulture in these countries.

These businesses are further complemented by global trading, packaging and extraction activities.

When Finlays bought out Homegrown, it took over all its farms, assets and rebranded as it sought to step up flower production and cash in on the booming trade.

This buyout is important since 40 per cent of Finlays’ flowers are sourced in Kenya with the rest coming from Holland, South Africa, Guatemala, Peru, Thailand and the UK.

Kenya’s horticulture business after the Homegrown buyout has not been as good as volumes have remained static over the last four years following the post-election violence and the global financial crisis.

In 2011, the horticulture industry earned the country Sh91 billion, up from Sh36 billion in 2010. Of these, flowers realised Sh58 billion from the sale of 110,000 tonnes.

A source conversant with the Lamorna-Finlays deal told the Business Daily that Lamorna has been running Hamorkop Flowers, one of the farms acquired by Finlays from Homegrown, for more than 10 months while negotiations went on.

He added that the process of Hamorkop becoming Lamorna’s second fully-owned farm was nearing completion.

Source: businessdailyafrica.com