TSL, Nampak deal collapses

SAMANTHA MADE

Tobacco Sales Limited (TSL), a publicly traded agribusiness firm, has abruptly abandoned its proposed US$25m acquisition of a controlling 51.43% stake in packaging company Nampak Zimbabwe Limited, with board chairman Antony Mandiwanza stating that shifting market fundamentals and looming shareholder resistance had rendered the transaction unattractive.

The deal, which had been formalised through a Share Sale Agreement (SSA) with Nampak Southern Africa Holdings Limited on March 25, 2025, had already received the green light from the Competition and Tariff Commission of Zimbabwe. Despite this regulatory clearance, TSL’s board concluded that the transaction could not proceed.

Mandiwanza yesterday told Business Times, a market leader in business, financial and economic reportage,that the company’s decision was informed by evolving market realities that undermined the original rationale.

“The fundamentals existing at the time we bidded have hugely shifted away from value creation. For example the market fragmentation changed, capex and working capital requirements are now more urgent than before. Consequently, value for money at $25m no longer holding so the deal now unattractive to shareholders,” he said.

TSL company secretary Fadzayi Pedzisayi confirmed that the board no longer believed shareholders would endorse the acquisition at an Extraordinary General Meeting (EGM).

“…despite the approval of the proposed transaction by the Competition and Tariff Commission of Zimbabwe, the board is no longer able to recommend the transaction and does not believe that the requisite shareholder approval will be obtained at an EGM,” Pedzisayi said.

Following this decision, Business Times can report that TSL formally advised Nampak SAHL that the shareholder approval condition precedent under the SSA would not be met.

Consequently, both parties subsequently agreed to terminate the deal with immediate effect.

Nampak Limited company secretary Sheila Lorimer also confirmed the collapse of the transaction, emphasizing that the termination was mutually agreed.

“Notification has been received from TSL that, notwithstanding a successful due diligence and the approval of the proposed transaction by the Competition and Tariff Commission of Zimbabwe, circumstances for TSL in motivating the proposed transaction to their shareholders have changed, and they have elected to withdraw from the proposed transaction, which Nampak has agreed to,” Lorimer said.

The collapse of the TSL-Nampak deal underscores the challenges of executing mergers and acquisitions in Zimbabwe’s complex corporate environment. Analysts highlight that regulatory clearance, while essential, is not the final hurdle—shareholder alignment remains a critical determinant of deal success.

For TSL, the termination represents both a strategic setback and a cautious step to safeguard investor confidence. By withdrawing before a potentially contentious EGM, the board mitigated the risk of reputational damage and shareholder unrest.

“The board of TSL Limited remains committed to pursuing strategic initiatives that create sustainable, long-term value for shareholders,” Pedzisayi said, signaling the company’s continued focus on growth through alternative avenues.

Nampak Zimbabwe, meanwhile, must reassess its strategic investment plans in light of the deal’s collapse. As one of Zimbabwe’s leading packaging manufacturers, the company has been seeking investment and partnerships to modernize its operations and expand capacity.

The TSL withdrawal highlights the difficulty of aligning corporate ambitions with shareholder sentiment in a market characterized by concentrated ownership and cautious investors. Zimbabwe’s M&A environment is shaped by macroeconomic volatility, a thinly traded stock market, and evolving corporate governance norms.

While due diligence and regulatory approval are necessary, securing shareholder buy-in remains a decisive challenge. High inflation and currency instability further complicate investor expectations, making the success of large-scale acquisitions uncertain even when the financial rationale is strong.

Legal experts note that SSA structures often include shareholder approval conditions to protect both buyer and seller. While such safeguards reinforce corporate governance, they can also derail well-structured deals when investor consensus is lacking.

Following the collapse of the deal, trading in both TSL and Nampak shares would be under scrutiny, as market participants assess the termination. Analysts suggest that investor relief stems from the clear communication and transparent handling of the collapse.

For TSL, the focus now shifts to strategic initiatives that can deliver long-term shareholder value without depending on high-risk acquisitions. Potential avenues may include partnerships in adjacent sectors, selective capital investment, or operational scaling of existing business units.

Industry observers note that TSL’s decision to walk away from the Nampak deal may ultimately reinforce investor confidence, portraying the company as a governance-conscious entity that prioritizes sustainable value over rapid expansion.

The collapse of the TSL-Nampak deal offers several lessons for companies in Zimbabwe. First, regulatory approval, though critical, is insufficient on its own. Second, early and sustained shareholder engagement is essential for high-value transactions. Third, corporate strategies must account for market volatility and investor sentiment to reduce the risk of deal failure.

The episode reflects a maturing corporate landscape in Zimbabwe, where companies increasingly recognize the importance of aligning growth initiatives with shareholder interests and governance best practices.

While the US$25m acquisition will not proceed, the incident underscores the importance of shareholder dynamics, governance integrity, and strategic prudence in executing large-scale transactions.

For TSL, the board’s priority is now to pursue alternative growth strategies that reinforce long-term shareholder value. For Nampak Zimbabwe, the challenge remains finding partners and investment opportunities capable of supporting modernization and expansion in a complex market.

Ultimately, the collapse of the TSL-Nampak transaction illustrates that in Zimbabwe’s evolving corporate environment, strategic ambition must be balanced with investor confidence and transparent governance for deals to succeed.