SeedCo International plans to acquire Zim unit

LIVINGSTONE MARUFU

SeedCo International (SCIL) is planning to acquire SeedCo Zimbabwe Limited (SCL) in a bid to harmonise governance structures and administrative functions as well as elimination of costs of maintaining two listed entities.

In an abridged circular to shareholders and stakeholders, SeedCo International board said the current structure of Seed Co International has certain peculiarities likely to disadvantage its performance on Botswana Stock Exchange comparable to “offshore type” stock exchange, the Victoria Falls Stock Exchange, relative to other Zimbabwe dual-listed counterparts.

The individualities of the SeedCo group include the SeedCo International which has operations outside Zimbabwe, unlike Zimbabwean dual-listed counterparts which are made up of both international and Zimbabwean operations, it said.

Also, SeedCo Limited comprises Zimbabwean operations and is only listed on the Zimbabwe Stock Exchange. 

The board believes having only one of the entities, SCIL, on the VFEX trading in US$ while leaving the other, SCL on the Zimbabwe Stock Exchange trading in Zimbabwean dollars will not protect  value for the shareholders.

“Accordingly, the board is hereby proposing  that SCIL acquires the entire issued shares of SCL to make it wholly owned subsidiary through the following steps  which include reverse acquisition  of SCL by way of acquiring SCL’s entire issued ordinary shares  through an open market offer to be settled through the issuance of SCIL shares, the delisting of SCL from ZSE on a voluntary basis and the listing on the BSE and VFEX of the new SCIL shares to be issued  as consideration for the acquisition of SCL,” reads part of the circular.

Vilmorin and SCL are the largest shareholders in SCIL with 32.15% and 27.3% respectively.

The duo would not be eligible to vote on the resolution regarding the acquisition of ordinary shares in SCL, the circular said.

The proposed transaction is expected to bring the Zimbabwean segment of the SeedCo Group premised on SCIL’s long term strategy of being the  African Seed Company  whose realisation will never be achieved  with the exclusion of the Zimbabwean  operations through SCL.

SCIL said  the current structure  puts SeedCo International  in a dilemma  of making  sure  the sister  operations in Zimbabwe survive in a manner  that does not  raise  conflict  of interests from a related-party perspective. 

The integration of the Zimbabwean operations will make SCIL’s profile on the VFEX comparable to its dual listed counterparts who comprise both international and Zimbabwean operations.

The board is proposing to acquire up to 247, 169,845, SeedCo Limited ordinary shares (constituting the entire issued share capital of SCL) to be settled through issuance of up to 252, 223, 526 new SCIL shares  based on a swap  ratio of 1 SCIL ordinary share for every  0.98 SCL shares  held.

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