An outlet of Nakumatt. [Photo/nation.co.ke]

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The proposed merger between Tuskys and the troubled Nakumatt has suffered a blow after the regulator rejected it.

It was rejected on the grounds that the application for review was not made under the correct clause.

Tuskys and Nakumatt have received communication from the Competition Authority of Kenya (CAK) advising them to make a fresh application for exemption from regulations on competitive behavior.

CAK said that the deal between Tuskys and Nakumatt did not amount to a merger as the leadership of Nakumatt would remain unchanged.

Nakumatt has been battling tough financial times that have seen it close a number of its outlets.

The deal was aimed at pulling Nakumatt from the doldrums.