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Is Zinox Group Leo Stan Ekeh planning to acquire Jumia?

Is Zinox Group Leo Stan Ekeh planning to acquire Jumia?

Zinox Group’s Head of Corporate Communications, Gideon Ayogu, neither officially confirmed nor denied the speculation. He did, however, say that “nothing positive is impossible”.

Business Insider Africa understands that Mr Ekeh’s takeover strategy usually entails gradually scooping up the shares of a competitor. He is reportedly doing the same thing at the moment with Jumia, especially as the ecommerce giant’s share price continues to tumble down.

As you should know, Jumia listed its shares on the New York Stock Exchange back in April 2019 with an offering price of $14.5. As of February 2021, the stock price had climbed to $65 per share. But the increase was only temporary because the stock had since crashed to $4.78 per share as of today, according to Bloomberg.

Year-to-date, the Jumia stock has seen its share price crash by 60% due to negative sentiments in the global capital market, as investors sell off their tech stocks.

Now, is it actually possible for Zinox Group to acquire Jumia? This is one interesting question that may never be answered correctly until an acquisition actually happens.

In the meantime, one thing we do know is that Zinox Group’s subsidiary —Konga — is Jumia’s main competitor in Nigeria. Konga is also the third largest ecommerce company in Sub Saharan Africa, according to Statista. More so, the company has been making a lot of investments to upgrade its technology and logistics capabilities.

On the other hand, Jumia remains the largest ecommerce platform in Africa, despite its financial troubles.

Last year, the company reported a loss of $227 million. This is one in a series of losses over the years. These losses, coupled with the declining share price, a drop in valuation to $477 million and a further drop in net equity to $413 million, raise insolvency concerns.

If these challenges persist, there is a possibility that Jumia’s majority stakeholders may decide to sell the company either to Zinox Group or other competitors such as Takealot.com.

Do note that divestment is not a new thing for Jumia’s core investors. In December 2019, they sold Jumia Travel to Travelstart. Jumia Travel was Jumia’s hotel and flight services vertical.

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