Egyptian B2B e-commerce startup MaxAB and Wasoko, a Kenya-based e-commerce player with operations in Tanzania, Rwanda, Uganda and Zambia, are in talks to merge operations, TechCrunch has exclusively learned from multiple sources. They say talks are still ongoing and the agreement hasn’t been finalized yet.
The merger talks come as B2B e-commerce companies in Africa continue to scale back operations due to funding scarcity. Wasoko has been no exception: it recently conducted its largest round of layoffs, which affected most of its employees in Kenya, including some of the company’s executives. Earlier in the year, it left Senegal and Ivory Coast markets and closed hubs, including the one in Mombasa, Kenya, amid a push for profitability.
Besides, our sources claim that while Wasoko closed a $125 million round last year, the funding was to be released as it met set milestones. TechCrunch learned that the company had only received $30 million by the time merger talks, which are said to be investor-led, started. Wasoko raised the Series B round from institutional investors such as Tiger Global and Avenir at a post-money valuation of $625 million.
Like Wasoko, MaxAB, the food and grocery B2B e-commerce and distribution platform serving a network of traditional retailers across Egypt and Morocco, has raised over $100 million (including a $55 million Series A and $40 million pre-Series B last year from DisruptAD, BII and Silverlake. The company was in talks with existing investors to raise a bridge round this year, according to several sources.
MaxAB is the largest player in Egypt’s and North Africa’s B2B retail and e-commerce market. It acquired YC-backed Waystocap for its Morocco expansion, and Capiter, which was supposed to pose a threat, shut down amidst conflict between its founders and investors.
As of last year, the prospect of a merger between MaxAB and Wasoko, both asset-heaving B2B e-commerce startups, seemed unlikely. In discussions with both CEOs, Belal El-Megharbel of MaxAB and Daniel Yu of Wasoko, last year, there was no indication that they were considering any form of merger. MaxAB’s post-pre-Series B plan focused on leveraging its network and relationships with local and multinational suppliers, aiming for full distribution in Morocco and expansion into Saudi Arabia by year’s end. Meanwhile, Wasoko aimed to explore West Africa expansion and broaden its product offerings to include point-of-sale merchant systems, bill payments, and social commerce.
MaxAB isn’t in Saudi Arabia, at least according to its website, while Wasoko isn’t operational in Ivory Coast and Senegal, the two West African markets it expanded into to complement operations in its core East African markets of Kenya, Tanzania, Uganda and Rwanda. The eight-year-old B2B e-commerce company has since expanded to Zambia and the Democratic Republic of Congo.
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