National Foods re-submits bid to merge with Profeeds
HARARE – National Foods, a Zimbabwe Stock Exchange-listed company, has reportedly restructured its proposed $10 million merger with fellow stock feed manufacturer, Profeeds to suit conditions acceptable to the Competition and Tariff Commission.
This comes after CTC blocked the previous proposed transaction which involved two of the country’s biggest stock feed manufacturing firms owned by one diversified group, Innscor Africa Limited.
Concerns were raised over the alleged monopolistic structure of the proposed merger between the two stock feed manufacturing giants, National Foods and Profeeds. Mike Lashbrook told Business Times that the company will continue working with CTC to reach a common understanding which would see the transaction going through.
“With respect to our proposed transaction with Profeeds we continue to work with the CTC to find a format that achieves our objectives and is acceptable to the CTC.
“National Foods’ stock feed division and Profeeds continue to function as separate entities, with our respective brands competing in the market,” said Lashbrook.
According to the structure, which was blocked by CTC, the two companies wanted to set up a new stock feed company which was to be run as a separate entity. African Feed Mills Private Limited, the new company was to be 60 percent owned by Profeeds while National Foods took the balance.
National Foods argued that the transaction was part of the company’s bigger plan to improve efficiencies and ensure cost effectiveness. The milling company further argued that the transaction would improve its cost structure.
Under the arrangement the two manufacturing companies were supposed to sell their respective stock feed manufacturing assets and lease their immovable property to the new company for purposes of manufacturing stock feed.
Natfoods plans on Pure Oil investment
As part of its product portfolio diversification, the listed firm acquired a 40 percent shareholding in Pure Oil. Pure Oil is a joint venture between Export Trading Group Tanzania and Parrogate Zimbabwe Private Limited, which has operations in Zimbabwe, Zambia and Malawi for cotton contract farming and oil seed processing.
Lashbrook said Natfoods will maintain its 40 percent stake in the company and there are immediate intentions to increase the shareholding in the ZimGold cooking oil manufacturer.
“Our stake in Pure Oil remains at 40 percent and we have no intention to change this. The business has performed very well and we have an excellent relationship with ETG who are our partners in the business.
Lashbrook said Natfoods had managed to make investments in the manufacture of green bar soap and the firm will soon be commissioning a fats plant to produce Bakers Fats and a margarine plant.