eBusiness Weekly
Business Writer
Victoria Stock Exchange-listed entity, Seed Co International Limited (SCIL) has released details of its proposal to acquire 100 percent of Seed Co Limited (SCL) share capital as the two companies plan to bundle.
As part of the plan, shareholders of Zimbabwe Stock Exchange-listed entity, SCL, will receive 1 new SCIL share for every 0.98 shares they hold.
The share swap ratio represents a premium of 5 percent on the average 30-day and 60-day VWAPs of SCIL and SCL shares as of 26 June 2020.
According to SCIL, pricing of the Offer was arrived at having considered the intrinsic values of SCIL and SCL, the market values on both the BSE and ZSE before the suspension of trading on the ZSE on 26 June 2020, comparable precedent transactions, the willing-seller and willing-buyer open market offer nature of the proposed.
If the deal goes through, it would be a reversal of their unbundling a few years ago. Before the year 2018 unbundling, Seed Co Limited was the holding company running a diversified business including operations across the African continent.
But in its quest to mobilise capital that it said was needed to defend the investment already deployed in the region as well as fund other expansion opportunities, the then Seed Co Limited unbundled 71 percent of its regional operations and primarily listed them on the Botswana Stock Exchange.
There was also a private placement where US$31 million was raised for expansion projects.
However, not all of its shares were listed on the BSE as some were listed on the ZSE.
Seed Co International Limited’s ZSE listing has, however, been caught into widely reported allegations involving other dual-listed stocks PPC and Old Mutual.
While investigations concluded that dual-listed companies, including Seed Co International Limited (“the Company”), were not involved in activities on the parallel foreign currency market, they were still not allowed to continue trading on the ZSE but will now have to be listed on the yet to be established Victoria Falls Stock Exchange Limited.
Management, however, believes Seed Co International Limited on its own cannot be “competitive and comparable to other Zimbabwean dual-listed counters.”
SCL is also expected to leverage the SCIL regional balance sheet to access affordable hard currency debt and equity funding as and when necessary.
According to SCIL, by accepting the Offer, existing and eligible new Zimbabwean shareholders will also have full exposure to the country risk hedge provided by the regional operations of SCIL; and foreign currency dividend distributions by SCIL which already reports its financial results and pays out dividends in US$.
If approved, the merger will see, Seed Co Limited, which was previously the parent company, becoming the subsidiary.
The Primary Offer opens for acceptance at 0900 hours on Wednesday 13 January 2021 and will close at the earlier of the announcement of the acquisition of a Control Block and commencement of the Secondary Offer or at 1600 hours on Wednesday 3 February 2021.
