Deputy Business Editor
FRESH comments from equity dealers last week suggest the planned Meikles-Tanganda and Kingdom tie-up is aimed at strengthening and fulfilling indigenisation policies. The comments are in stark contrast to widespread market sentiment that Meikles is swallowing up its subsidiaries, and concentrating value in a few hands, particularly in a market that has got used to unbundling. Meikles holds controlling stakes in both Tanganda and Kingdom: 44 percent in Tanganda and 36 percent in Kingdom.
Against this background, analysts and investors alike have been uneasy over the merger talks which they say are tilted heavily in Meikles’ favour.
A few others believe Kingdom would benefit, particularly given that Meikles had come to the group’s rescue in times of financial stress.
Questions over the trade name and management have also popped up every now and then in the market.
The issues of dilution and control have created anxious moments in the market, yet unsure of the actual structure of the proposed merger.
But analysts saw plenty of logic in the multi-billion-dollar deal last week saying it would fit perfectly well in Zimbabwe’s black economic empowerment drive.
"The deal is beautifully positioned and contains all the ingredients to meet the objectives of indigenisation," a research analyst with a Harare stockbroking firm said on Friday.
"This deal is capable of achieving indigenisation on two fronts: shareholder restructuring and empowerment of management, employees and ultimately communities."
Meikles and Tanganda are viewed largely as white businesses while Kingdom is the very opposite.
Another merging partner, little known Cotton Printers Ltd, is predominantly white, too, and is 100 percent owned by Meikles.
Zimbabwe has proposed to economically empower local people who have traditionally been sidelined from mainstream economic activity.
Government plans to transfer at least 51 percent in all foreign-owned enterprises into the hands of locals.
Analysts said if the merger sailed through, then a common board would be a starting point where shareholders would discuss the essentials of indigenisation.
Another analyst at Kingdom Stockbrokers, who preferred anonymity, said: "Once the heads of agreement are in place, the wider discussion around empowerment of employees and possibly of associates of these companies comes next.
"Rewarding those who have added value to these companies is crucial and this deal provides a robust opportunity to do so.
"Voluntary and proactive indigenisation embraces the policy, which seeks redress for indigenous persons through ownership.
"Empowerment, as represented by the Meikles, Tanganda, Cotton Printers and Kingdom restructuring should translate into a robust new group with local national interests at heart and aspirations to compete and grow regionally and globally."
On paper the proposed merger is easily one of the biggest ever transactions on the Zimbabwe Stock Exchange in more than a century of trading.