According to several sources exclusively disclosed to TechCrunch, Uganda-based Wasoko, an e-commerce business based in Kenya that also operates in Tanzania, Rwanda, Uganda, and Zambia, and Egyptian B2B startup MaxAB are in talks about merging their operations. The specifics of the deal were not clear. The agreement hasn’t been finalized, according to sources, and conversations are still going on between MaxAB And Wasoko.
The merger discussions occur while B2B e-commerce businesses in Africa are cutting back on operations because of a lack of finance. This has not been the case with Wasoko, which recently carried out its biggest wave of layoffs that impacted the majority of its Kenyan staff members, including a few executives. It closed hubs, including the one in Mombasa, Kenya, and exited the Senegalese and Ivory Coast markets earlier in the year as part of a drive for profitability.
Also, Wasoko closed a $125 million round last year, but the funds weren’t supposed to be distributed until it achieved certain targets. As TechCrunch discovered, the company had just garnered $30 million when the rumored investor-led merger negotiations began. The corporation disputes this assertion, stating that they were paid $113 million and that “no milestone system for the fund’s release” was in place. At a post-money valuation of $625 million, Wasoko raised the Series B round from institutional investors like Tiger Global and Avenir.
Similar to Wasoko, MaxAB is a B2B e-commerce and distribution platform for food and groceries that services a network of conventional merchants in Egypt and Morocco. It has raised over $100 million so far, with $55 million coming from a Series A and $40 million from a pre-Series B lead by DisruptAD, BII, and Silverlake last year. Some reports claim that the business was in discussions to raise a bridge round earlier in the year with its current investors.
In the B2B retail and e-commerce markets in Egypt and North Africa, MaxAB holds the largest market share. For its growth into Morocco, it purchased Waystocap, which was sponsored by YC, and Capiter, which was deemed a danger, shut down due to disagreements between its backers and founders.
The possibility of a combination between asset-heaving B2B e-commerce companies MaxAB and Wasoko appeared not likely as of last year. During last year’s conversations, neither of the CEOs—Belal El-Megharbel of MaxAB nor Daniel Yu of Wasoko—said that a merger was being considered. MaxAB aimed to achieve complete distribution in Morocco and expand into Saudi Arabia by the end of the year by utilizing its network and contacts with local and multinational suppliers as part of its post-pre-Series B plan. Concurrently, Wasoko sought to investigate growth opportunities in West Africa and expand its range of products to encompass point-of-sale merchant systems, bill payments, and social commerce.
It remains to be seen whether the MaxAB and Wasoko merger will take place in the foreseeable future. Even if negotiations have taken place, the deal might not close. Long-term benefits to both organizations will be enormous if the merger goes through.
English