We were surprised and disappointed, Mwaura Ngaari, regional external affairs manager of Kenya Shell, told Reuters, confirming the decision.
We are actually going to appeal.
Media quoted Finance Minister Amos Kimunya as announcing rejection of the deal in the official government gazette, and suggested the reason was to avoid Shell becoming over-dominant.
The Minister of Finance rejects the takeover of 50 percent of the shares in Kenya Shell Ltd, BP Kenya Ltd and BP (Malindi) Kenya Ltd. by the Shell Petroleum from BP Africa Ltd., local daily the Standard quoted Kimunya as saying in the gazette.
Trade experts observed that the move was informed by the fact that the takeover would have made Shell Petroleum a dominant player in the local oil industry, the paper added.
The newspaper said it was the first time under President Mwai Kibaki's government, in power since 2002, that the ministry's monopolies and price control department had invoked its powers to stop an acquisition.
But Ngaari said the monopoly fears were unfounded, given that two other firms -- Kenol/Kobil and Total -- had similar shares of the local oil products marketing sector.
The Shell/BP joint venture runs about 130 service stations and also sells lubricants in various sectors, Ngaari said, adding that the acquisition proposal was to buy BP's shares but not its assets. No price was disclosed.
We do not believe this is a monopolistic situation, he added. We shall seek to speak to the minister and ask him to fully understand. We do not believe actually that these acquisitions could have changed day-to-day operations.