Botswana grocery retailer Choppies Enterprises, which listed on the main board of the JSE last month, on Monday announced that it intended to purchase 10 Ukwala supermarkets in Kenya for a purchase consideration of about $10m.

The company said the transaction was in line with its strategy to expand into new markets in sub-Saharan Africa and its stated target of operating more than 200 stores across at least six countries by December 2016.

"The transaction provides the company with an immediate footprint of established stores and a platform from which to grow in Kenya. Three of the supermarkets are located in the country’s capital Nairobi, two in Nakuru and five in the port city of Kisumu, the third-largest city in Kenya," said Choppies.

Four years ago the company operated only 57 stores in Botswana, and has been growing annual revenue at an average of 27%. Gross profit has increased at a compound annual growth rate of 34% since 2011, reaching 177-million pula in financial 2014.

In the next two months Choppies will start operations in Namibia, Zambia and Tanzania, targeting lower-to middle-income consumers.

The acquisition is subject to final due diligence and inventory valuation. The purchase consideration will be funded with debt and from existing cash resources.

At 10.56am, shares were up 3.09% to R5.67, valuing the company at about R7.1bn.

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