By Prosper Ndlovu
THE Competition and Tariff Commission (CTC) has assessed and approved seven mergers and acquisitions in the first half of 2018 in what is seen as a positive indicator of growing investor sentiment on the Zimbabwean economy.
South Africa remains a dominant investment source with four out of the seven approved transactions involving the neigbouring country’s corporates. Other transactions are spread between regional and international firms from Tanzania, Singapore, the United States and Germany.
In its latest update for the period, the commission reported 100% acquisition of shareholding in three companies – Blue Ribbon Industries, Genop Holding Limited and Much Asphalt. Shareholding in most of the approved transactions is largely dominated by foreign players who have key business interests in Zimbabwe.
CTC classified as a horizontal merger the 100% acquisition of Blue Ribbon by diversified Tanzania domiciled food manufacturing giant, Bakhresa Holdings. Blue Ribbon is a Zimbabwean company that focuses on grain milling and stock feed manufacturing. According to the commission, the transaction was approved on condition that at least 80% of milling products will be sold and utilised by the merged entity and remain products of Zimbabwe, that the firm will source 50% of its raw materials locally and that products will be supplied to all customers without discrimination.
Much Asphalt (Proprietary) Limited, which manufactures and supplies hot and cold asphalt products, has been acquired by AECI Limited in a conglomerate merger agreement. AECI focuses on explosives and specialty chemicals and has interests in mining and agri-business. Both companies are domiciled in South Africa.
Similarly, Genop Holding has been taken over by Adcock Ingram Healthcare (Private) Limited. Both firms are also domiciled in South Africa. Adcock Ingram is a pharmaceutical company that offer a wide range of products to private and public sector while Genop specialises on marketing and distribution of instrument, surgical and pharmaceutical products. While Genop does not have registered offices in Zimbabwe, CTC said the firm was involved in marketing and supply of Epimax skincare products through an appointed agency.
The commission also announced a horizontal merger between Linde AG and Praxair Incorporation under a newly incorporated Irish holding company, Linde Plc. Linde AG is an international gases and engineering company headquartered in Germany whose presence in Zimbabwe is through BOC Zimbabwe (Pvt) Limited. Praxair is an industrial gases firm headquartered in the United States with operations in America, Asia and Europe.
Meanwhile, Pioneer Foods (Proprietary) Limited has acquired 50,1% shareholding on Heinz Foods South Africa. Both companies are incorporated in South Africa and export their products into Zimbabwe through appointed third party agents and generate more revenues from the country. Similarly, South Africa’s Magotteaux International has acquired a 15% shareholding in Grinding Media, also from South Africa, in a horizontal merger transaction. According to CTC, Magotteaux is part of Sigdo Koppers, a listed company based in Santiago, Chile. It specialises in mining and industrial products and is a key supplier of non-cast products to Zimbabwe.
The regulator has also approved a proposed 49% vertical shareholding acquisition in Niculata Investments Limited by Vilmorin Singapore (Private) Limited, which controls 30% shareholding in Seed Co Limited. The later is a producer of vegetable seeds while the former is a producer and distributor of vegetable and small grain seed. Under the deal Vilmorin would continue to supply other Zimbabwean vegetable seed distributors with vegetable seed varieties and offer non-discriminatory terms and conditions in terms of price, quantity and quality.
However, the commission blocked the proposed amalgamation of diversified milling conglomerate, National Foods Limited’s stock feed manufacturing business with Profeeds (Pvt) Limited. Profeeds is a company incorporated in Zimbabwe with focus on manufacturing and selling stock feed.
“The transaction was prohibited as it was likely to substantially prevent or lessen competition or create a monopoly situation that may be contrary to public interest in the production and distribution of stock feed market,” said CTC. The proposed transaction was classified as a horizontal merger.