Prosper Ndlovu, Business Editor
THE Competition and Tariff Commission (CTC) has blocked the proposed horizontal merger between diversified milling conglomerate, National Foods Limited’s stock feed unit with Profeeds (Pvt) Limited on the grounds that the move would create a monopoly that could stifle fair competition in the market.
“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 in a latest update for the first half of 2018.
National Foods is listed on the Zimbabwe Stock Exchange and is one of the largest manufacturers and marketers of food stuffs as well as stock feed.
Profeeds is also incorporated in Zimbabwe and its main focus is manufacturing and selling stock feed. The stockfeed sub-sector is a critical pillar in the livestock and beef production value chain.
The proposed merger once came into the limelight mid-last year when National Foods indicated its desire to ride on the deal to improve its efficiencies and its cost structures. Under the arrangement, the two stockfeed manufacturing companies sought to sell their respective manufacturing assets and lease their immovable property to the new company for purposes of manufacturing stock feed. The transaction was expected to ensure that the two companies utilise their capacity to the fullest while flexing their muscles against competition from rival operators.
Meanwhile, during the period, CTC 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 in the economy. South African firms dominated approved transactions with four out of seven deals involving the neigbouring country’s corporates. Other transactions were spread between regional and international firms from Tanzania, Singapore, United States and Germany.
There were three 100% acquisitions of shareholding in Blue Ribbon Industries by Bakhresa Holdings of Tanzania.
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 in 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 will 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.