(HERALD) Govt takes over Olivine
Govt takes over OlivineBy Itai Musengeyi
GOVERNMENT has taken over Olivine Holdings following the acquisition of a 49 percent shareholding from H. J. Heinz of the United States by the Cotton Company of Zimbabwe for US$6,8million. The takeover was done through the Industrial Development Corporation. Government already had a 49 percent stake in Olivine while it has shareholdings in both Cottco and the IDC.
The deal means Olivine becomes the first company the Government has acquired since it indicated that it would take over companies which stopped production in the wake of the price freeze.
Earlier this year, Olivine was in the news amid reports that it had been ordered by the US government to scale down on production as part of that country’s sanctions regime against Zimbabwe.
Some companies stopped production in protest over the price controls but Government has started reviewing and permitting some sectors to increase prices to ensure viability and supplies in the market.
The acquisition also comes in the wake of rising concerns that Government was not using its shareholding in most food companies to ensure there were adequate supplies on supermarket shelves.
Government either wholly or partially owns shares in companies dealing with food, among them the Grain Marketing Board, Cold Storage Company, Cairns and others such as fertilizer producer Chemplex Corporation.
Many of the companies in which Government has shares were left to operate on their own as if they were wholly privately-owned without due regard to national requirements.
Cottco yesterday advised its shareholders of the acquisition — which awaits regulatory authority approval.
"The board of directors of the Cotton Company of Zimbabwe Limited would like to advise shareholders that the company has acquired a 49 percent shareholding in Olivine Holdings Limited from H. J. Heinz Company through the Industrial Development Corporation of Zimbabwe Limited for US$6 825 000," read the notice from Cottco.
It said the acquisition would boost business through diversification.
"This acquisition will add critical mass to the company (Cottco) while allowing the company to diversify from its traditional revenue streams and operating risks."
Olivine’s predominant business is the production and marketing of household goods, edible oils and fats. It owns 100 percent shareholding in Olivine Industries (Pvt) Ltd, Chegutu Canners (Pvt) Ltd and Oil Seed Processing (Pvt) Limited. Royal Baking Powder is an associate company at 40 percent.
IDC conducted a due diligence exercise on Olivine Holdings to prepare the way for the group’s takeover by Government.
A valuation of Olivine’s assets was done, putting H.J. Heinz’s stake at US$6 million.
IDC general manager Mr Mike Ndudzo was quoted in the media in June as saying they were negotiating the purchase of H.J. Heinz’s stake in Olivine on behalf of Government.
The US company was reportedly not happy with the price controls.
It was one of the first foreign investors to invest in independent Zimbabwe when it partnered Government in buying the food and household goods manufacturer in 1982.
Cottco was incorporated in 1994 as the successor organisation to the monopoly statutory body, the Cotton Marketing Board.
It was privatised in October 1997 and listed on the Zimbabwe Stock Exchange on December1, 1997.
Cottco is the largest ginner and marketer of cotton in Southern Africa. It is involved in every facet of the cotton production and sales process, including the provision of agronomic advisory services, production and merchandising of planting seed, supply of chemicals and fertilizer, raw cotton transportation, cotton ginning and warehousing as well as marketing lint and cotton seed in global markets.
Cooking oil can be made from cottonseed and the takeover of Olivine by Cottco is designed to create synergies.
IDC has a minority shareholding in Chitungwiza-based Surface Investments Private Limited, a growing cooking oil maker.
The majority shareholder is an Indian investor, Midex Global Private Limited.
Labels: OLIVINE HOLDINGS, TAKEOVER, THE HERALD
posted by MrK @ 6:00 AM
1 Comments:
The deal means Olivine becomes the first company the Government has acquired since it indicated that it would take over companies which stopped production in the wake of the price freeze.
Wow. That is smooth. They're beating the capitalists at their own game. From all the news in the mainstream media, you'd think they have no money left. First they slam them (with price controls), then they buy them cheap. Sounds familiar over at the BBC? Lonrho? :)
Welcome to the 'cycle of creative destruction'.
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