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Wasoko and MaxAB Merger Delayed by Challenges in African E-commerce
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Wasoko and MaxAB Merger e-commerce challenges: Nairobi’s Wasoko and Cairo-based MaxAB have announced a planned “merger of equals”.
The two B2B e-commerce startups enable retailers to order fast-moving consumer goods (FMCG) from suppliers via their respective apps.
The merger is to create better economies of scale in a sector that holds a lot of promise in the region.
Wasoko and MaxAB Merger e-commerce challenges
When the planned merger was first announced, the B2B e-commerce companies were active in eight countries.
Now, that number is down to six: Kenya, Rwanda, Tanzania, DRC, Morocco and Egypt, with scores of layoffs in the wake of that downsizing.
Additionally, the deal process is considering a review of the ownership stakes, with Wasoko originally set to own 55% of the new entity and 45% of MaxAB based on revenues at the end of 2023 due to the Egyptian pound’s devaluation in late Q1 2024.
MaxAB may agree to this, because sources speaking to TechCrunch say it urgently needs the merger to close due to its severely depleted runway.
MaxAB and Wasoko agreed to a preliminary merger in December 2023 to collaborate closely in extending trade within Africa and deploying new technologies.
According to the companies, the merger would enable them to serve 65 million customers in eight African markets.
The two B2B eCommerce startups allow retailers to order fast-moving consumer goods (FMCG) from suppliers using their respective apps.
Also Read: Wasoko Exits Zanzibar, Pauses Operations in Uganda and Zambia
While both companies have yet to reveal the size of the deal, they are both significant contributors with funding totaling hundreds of millions of dollars.
They have also raised funds and plan to raise additional funds after the merger.
Wasoko and MaxAB Merger E-commerce Requires Time To Finalise
Wasoko CEO Daniel Yu will focus on investor relations, HR, and fundraising, while MaxAB CEO Belal El-Megharbel will manage internal matters such as technology and operations, according to sources familiar with their new roles.
A Wasoko spokesperson informed TechCrunch, saying, “Regarding our merger with MaxAB, it is important to note that the process is progressing as expected. It is also in line with the initial terms”.
“Mergers of this magnitude typically require a substantial amount of time to finalise after the signing of initial terms, and our process is advancing as planned.”
4DX Ventures is a pan-African investor that supported both companies during their early and growth-stage round.
It’s of no surprise that the company is overseeing the merger and facilitating ongoing discussions.
“Although 4DX is a shared investor and board member of both companies, it acknowledged its conflict of interest and, therefore, refrained from participating in the core negotiations and decisions between the two companies,” Wasoko stated.
