HomeBusinessSeedCo mulls $5,1 billion takeover plan

SeedCo mulls $5,1 billion takeover plan

PAN-African seed producer Seed CO International Limited (SCIL) is to assume control of its Zimbabwe-based sibling, Seed Co Limited (SCL), in a deal estimated at $5,1 billion, according to a circular released on Friday.

BY TATIRA ZWINOIRA

SCIL delisted from the Zimbabwe Stock Exchange (ZSE) on October 23, after authorities directed three firms with fungible stocks to leave the bourse.

The three, including Old Mutual and cement producer PPC, were offered an option to list on the newly established forex-denominated Victoria Falls Stock Exchange (VFEX).

On Friday, SCIL said by listing on the VFEX, it would only be allowed to raise capital for local operations.

However, it had no operations in Zimbabwe.

It said directors had seen it fit to take over SCL and list the entire operation in Victoria Falls to raise foreign currency for domestic operations.

The deal will see SCIL taking over the entire issued share capital of the Zimbabwean operation, which will then de-list from the ZSE.

“Subject to SCIL shareholder approval in a general meeting, the board is hereby proposing the acquisition by SCIL of up to 247 169 845 SCL shares (constituting SCL’s entire issued share capital),” SCIL said in a circular to shareholders.

“Unlike Zimbabwean dual-listed counterparts, which are made up of both international and Zimbabwean operations…Seed Co Limited comprises Zimbabwean operations and is only listed on the ZSE.

“The board believes having only one of the entities, SCIL, on the VFEX trading in US$ while leaving the other, SCL on the ZSE trading in Z$ will not protect value for the shareholders.

“Further, the provisions and incentives captured in Zimbabwe’s Statutory Instrument 196 of 2020 have been designed to make the VFEX a platform for mobilising fresh hard currency capital for deployment mainly into Zimbabwean operations.

“This would present challenges to SCIL with no underlying Zimbabwean operations, to justify raising any capital on the VFEX for deployment outside Zimbabwe.”

The proposed transaction will be worth US$62 204 326, putting the value of the proposed SCL shares at nearly $5,1 billion.

“SCIL will invoke the takeover provisions of the ZSE listings requirements and COBE (Companies and Other Business Entities Act) immediately after receiving acceptances in aggregate of 35% of the entire issued share capital of SCL,” the circular added.

“Immediately after receiving acceptances by holders of at least 35% of the entire issued shares of SCL, SCIL will, through an announcement in the Zimbabwean press, the ZSE portal and on the SCL website, notify the remaining SCL shareholders of its intention to acquire their shares.”

It said if at least 90% of the remaining shareholders accept the secondary offer, SCIL will exercise its entitlement to acquire all the remaining SCL shares.

This will be done on the same terms that applied to shares whose holders accepted both the primary offer and the secondary offer.

According to SCIL, based on the pro forma financial position of SCIL, the net asset value per share will increase from US$0.19 to US$0.20 after the successful consummation of the transaction.

SCIL chairman David Edward Beaumont Long said while the board appreciated the proposal to migrate the secondary listings of dual-listed counters to the VFEX, shareholders were not protected.

“The board is of the view that the current structure of SCIL has certain peculiarities likely to disadvantage its performance on another BSE comparable ‘offshore type’ stock exchange, the VFEX, relative to other Zimbabwean dual-listed counterparts,” he said.

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