In a significant development within the Kenyan beauty industry, the Competition Authority of Kenya (CAK) granted approval for the acquisition of specific assets of Style Industries Limited by Hair Manufacturing Kenya Limited.

This transaction marks a notable shift in the market dynamics, as it involves the transfer of essential assets such as plant and machinery, office equipment, and inventory from Style Industries to the newly established Hair Manufacturing entity.

“The proposed transaction involves the acquisition of certain assets – plant and machinery, office equipment and inventory – of Style Industries by Hair Manufacturing,” said the CAK in a statement.

The beauty sector in Kenya is a vibrant and competitive space, with a mix of local manufacturers and imported products catering to diverse consumer preferences.

The Kenyan Beauty Market

In the statement, CAK noted that the market for hair extensions and wigs is largely fragmented having players with local manufacturing capabilities as well as a significant extent of imported goods.

“Some notable players include Angels Hair Collection Kenya (Sanaa Industries Ltd), Lush Hair Kenya (Tolaram Group), Fashion Idol (Rebecca Fashion), Olivia Hair Kenya (Di Lorenzo Ltd), Africa Hair Factory Ltd., Unique Beauty Salon Consultants (UBSC), Style Haven Ltd., Exotic Dreadlocks & Weaves Ltd. and Lazy Daisy & Shear Elegance, among others.”

“In the last 5 years, the market has experienced the entry of new players like Lush Hair Kenya and Olivia Hair Kenya,” said CAK.

Furthermore, the body also cited a research report from 6wresearch, a global market research and consulting firm, saying that Kenya has increasingly been relying more on imports to meet its growing demand of human hair extensions.

The report also noted that the domestic production and supply trails local demand.

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CAK Conditions on Approval of the Hair Company Assets

The approval from CAK, while paving the way for this acquisition, comes with a crucial condition that Hair Manufacturing must retain at least 70% of Style Industries’ employees on their current terms for a period of 12 months post-acquisition.

This stipulation aims to safeguard jobs and ensure stability within the acquired entity during the transition phase.

However, concerns have been raised regarding potential job losses, with projections indicating that up to 652 jobs, equivalent to 30% of Style Industries’ workforce, could be at risk as a result of this transaction.

Also, the acquisition of Style Industries’ assets by Hair Manufacturing Kenya Limited holds significance not only for the companies involved but also for the broader beauty industry in Kenya.

Style Industries, known for its popular ‘Darling’ brand hair products, has been a prominent player in the market, catering to diverse hair care needs of consumers.

This acquisition reflects a strategic move by Godrej Consumer Products, the parent company controlling Style Industries, to restructure its operations in Kenya and optimize its business presence in the region.

CAK’s Regulatory Oversight Mandate

The CAK’s approval process underscores the regulatory oversight and due diligence involved in such transactions, emphasizing the need to protect the interests of all stakeholders.

“This approval has been granted based on the finding that the transaction is unlikely to negatively impact competition in the market for hair extensions and wigs.”

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“However, the transaction will elicit negative public interest concerns. Specifically, it will lead to the loss of 652 jobs which is equivalent to 30% of the target’s 2,171 employees,” said CAK in the notice without revealing the value of the deal.

By closely monitoring competition and market dynamics in the hair care sector, CAK aims to ensure fair practices and uphold consumer welfare.

The acquisition of Style Industries’ assets by Hair Manufacturing Kenya Limited represents a significant business deal that will have implications for both companies and the wider Kenyan market.