Tech News

Sources: Wasoko-MaxAB e-commerce merger faces delays amid headwinds in Africa

Published

3 months ago

June 10, 2024

Sources: Wasoko-MaxAB e-commerce merger faces delays amid headwinds in Africa

In December of last year, two B2B e-commerce startups, Wasoko in Nairobi and MaxAB in Cairo, announced a planned merger to create better economies of scale in the wake of challenges posed by the Covid-19 pandemic. However, nearly seven months later, the closing of the deal has been delayed due to extended due diligence, ongoing restructuring, and macroeconomic factors.

The delay is significant given the high profile of the deal, which has been touted as the largest merger in African e-commerce. Both companies, which have raised substantial funding from prominent investors, were expected to close the deal in Q1 of this year.

Since the announcement of the merger, the companies have reduced their operations from eight countries to four and have undergone layoffs. There is now discussion about revising ownership stakes in the new entity due to currency devaluation issues.

While both companies claim to have received additional investment to reach profitability, they are still in talks to raise more funds post-merger. Attracting new investors in the current funding climate may prove challenging unless the companies adapt their operations for profitable scaling.

To cut costs, the companies have laid off employees, parted ways with executives, and halted operations in certain markets. As the merger nears completion, the CEOs will take on different roles within the new entity.

Wasoko CEO Daniel Yu will focus on investor relations, HR, and fundraising, while MaxAB CEO Belal El-Megharbel will handle internal matters such as tech and operations. The merger is progressing as planned, according to a Wasoko spokesperson, but finer details are not being disclosed at this time.

High-profile investors like Tiger Global, Silver Lake, Avenir, and British International Investment have injected over $240 million into Wasoko and MaxAB. 4DX Ventures, a pan-African investor, is overseeing the merger and ongoing discussions.