CMC Holdings has announced that a potential investor is undertaking due diligence on the Nairobi bourse listed motor dealer; a move that could result in a strategic investment or a takeover.

Joel Kibe, CMC Holdings chairman on Wednesday during the motor dealer’s 48^th and 49^th combined annual general meetings said that the company has been in talks with a number of interested investors. He also said that the firm had informed the Capital Markets Authority (CMA) of a potential deal.

“What we are doing is due diligence and we have reported this to CMA. The deal is not yet concluded…We have a serious potential strategic investor and the discussions are ongoing. Whatever will happen whether as an investor or a complete takeover will depend on the due diligence,” said Mr Kibe.

The disclosure comes a month after AccessKenya, a telecommunications firm that is also listed on the Nairobi Securities Exchange (NSE) disclosed that it is in talks with South Africa’s Dimension Data in a Ksh3.05 billion ($36.4 million) deal that could see the company delist from the bourse.

READ: Somen's set to make $11 million through AccessKenya sale

Mr Kibe did not disclose details on the potential investor but if as a result of the due diligence the motor dealer is bought out, the NSE could see two firms exit the market this year.

CMC Holdings had not held an annual general meeting for two years after board room wars broke out and spilled into the public domain leading to investigations and disclosures of fraud and misappropriation of funds that had been taking place over a period of years.

As a result of CMA investigations, former executive directors Martin Forster and Sobakchand Shah and non-executive directors Charles Njonjo, Peter Muthoka, Jeremiah Kiereini, Richard Kemoli and Andrew Hamilton were disqualified from appointment as a director of any listed company or licensed or approved person by the regulator.

READ: Kenya: Boardroom shake-ups ahead as nine directors banned

Its shares were suspended from trading at the NSE on September 16, 2011 and shareholders have not been able to buy or sell ever since.

The motor dealer’s former auditors, Deloitte & Touche and current auditors Ernst & Young expressed a qualified opinion on CMC Holdings audited financial statements for the period ended September 2011 and September 2012 because of offshore bank accounts which were not audited or included.

Mr Kibe told shareholders that in spite of the board room wars, investigations and disclosures of fraud and misappropriation of funds, the new board of directors was steering the company back into profitability and that they (shareholders) will be given information on the potential investor after the due diligence is complete.

“I request our shareholders to support the board. Within the coming few months we may be calling you for an EGM (Extraordinary General Meeting),” said Mr Kibe.

CMC Holdings posted a profit after tax of Ksh105.35 million ($1.2 million) for the period ended September 2012 from a loss of Ksh181.14 million ($1.8 million) over the same period the previous year.

The company’s Kenya subsidiary posted a profit of Ksh177.28 million ($2.07 million) as at the end of September last year compared to a Ksh307.45 million ($3.08 million) loss after tax the previous year while.

Its Uganda subsidiary saw its profits after tax drop by 70.89 per cent to Ksh25.6 million ($300,223) from Ksh87.94 million ($880,921) over the same time period while its Tanzania subsidiary posted Ksh94.78 million ($1.11 million) loss compared to a profit of Ksh43.11 million ($431,836) the previous period.

At the beginning of this month CMC Motors lost a case in which it was seeking to stop Jaguar Land Rover from dealing with a rival firm.

The motor dealer has previously enjoyed exclusive rights in Kenya and Uganda for the franchise and in addition to expressing a qualified opinion on CMC Holdings accounts for the period ended September last year, Ernst & Young noted that the loss of the franchise could affect the company’s ability to continue as a going concern.

Mr Kibe however said that even without the franchise, CMC Motors was still able to post a profit Ksh147.49 million ($1.7 million) for the period ended March 2013 compared to Ksh383.55 million ($4.6 million) for the period ended March 2012.

Revenues rose marginally by eight per cent to Ksh6.89 billion ($80.5 million) compared to Ksh6.37 million ($76.8 million) over the same period of time.