Jumia shares tumbles as Zinox mulls acquisition
Shares of Africa’s e-commerce giant, Jumia fell 11.32% on Wednesday to $4.78 as investors flee tech stocks amidst a market sell-off that has engulfed US Stocks.
Jumia’s market rout has seen its share price crash by 60% YTD and 81% from its year high taking its valuation to just $477 million. Jumia IPOed in 2019 at a share price of $14.5 and rose to as high as $65 in February of 2021, valuing it at about $6.2 billion at the time.
The cratering of Jumia has increased speculation that Zinox Group, owners of its rival Konga could be mounting a takeover.
A potential takeover of Jumia by Zinox
Nairametrics reliably gathers that Chairman of the Zinox Group, and billionaire, Leo Stan Ekeh, has been scooping Jumia shares indirectly suggesting a possible acquisition could be in play if the opportunity arises.
According to a source close to Mr. Ekeh, “he is replicating the same strategy which he deployed successfully in acquiring Yes Mobile, and more recently, Konga” a fierce competitor of Jumia.
- Zinox acquired Konga in 2018 when the company was near comatose as intense competition with Jumia and other e-commerce competitors forced it to burn through its cash pile.
- Nairametrics understands turned “profitable” last year following a massive cut in operation costs, restructuring, and implementation of a drastic change in its business model. A reliable source in Zinox informed Nairametrics that prior to the acquisition, Konga was posting about N400 million in losses monthly.
- A reliable source informed Nairametrics that Zinox has so far invested heavily in technology, and logistics and recently invested about N4 billion in infrastructure.
- Konga has been acquiring warehouses across the country as it adopted a combination of online and offline sales to meet customer demand.
Read: Bitcoin plunges below $27,000, erases 2021 gains as cryptocurrency sell-off intensifies
When asked to confirm the possible acquisition, the Head of Corporate Communications for Zinox Group, Gideon Ayogu stated that “nothing positive is impossible” refusing to confirm or deny Mr. Ekeh’s intent to acquire Jumia.
Nairametrics also tried to reach out directly to the Chairman of Zinox Group, Leo Stan Ekeh for comment but got a response that he was outside the country.
Is an acquisition plausible?
Taking over Jumia will not be easy considering that it is a fierce competitor to Konga. It will also likely make Zinox the largest e-Commerce owner in Africa.
- To do this, Zinox will have to offer investors of Jumia an offer that is at a premium to Jumia’s existing share price of $4.70 that is if the price does not fall further.
- Jittery investors and lenders looking to cut their losses on Jumia could find such a move attractive if the price is right.
- Other rivals could also mount a takeover bid, considering Jumia’s wider footprint in Africa.
- Jumia reported a loss after tax of about $227 million in its annual income statement filing in 2021 and has only $413 million left as Net Equity. At the rate of losses it incurs annually, the company could go technically insolvent in a matter of years.
