ZIMBABWE – A multi-million-dollar historic merger between Zimbabwe’s largest and second largest milk processor by market share, Dairibord Holdings Limited and Dendairy, has been kicked to the curb.
The planned transaction, according to NewsDay was first announced in July 2020 with DHL seeking to leverage on Dendairy’s strategic investments into production of dairy products and its access to the regional market.
According to reports, in 2018, Dendairy started a project to expand operations at its Kwekwe plant, which would have seen the firm adding three new packaging lines to increase production from 4.6 million litres per month to eight million litres.
As such, the successful conclusion of the discussions could have led to improved raw milk production for DHL while also boosting foreign currency earnings and local market share in the dairy sector.
The merger would have created a strong monopoly in the industry while creating a regional milk processing powerhouse.
However, negotiations for a possible merger between the two dairy entities have collapsed with Dairiboard, which is listed on the Zimbabwe Stock Exchange, urging its shareholders to disregard the Dendairy deal.
“Shareholders are referred to the cautionary announcement first published on July 1, 2020 and are advised that the conclusion of the discussions indicates that it is in the interest of both parties to discontinue the process and remain as separate entities.
“The contents of the cautionary have ceased to have any effect on the company. Accordingly, caution is no longer required to be exercised when dealing in the company’s shares. The parties express best wishes and success for the future,” the statement read.
CSC investor pumps US$6 million to fix ranch infrastructure
Meanwhile, the defunct State-owned meat processor and marketer, the Cold Storage Company (CSC) is set to resume normal operations.
The company has adopted a new business model where it is engaging partners to run some of its cattle ranches on a long-term basis as part of efforts to build the national herd and revive the country’s once largest meat processor.
Under the new model, CSC will now largely focus on meat processing at its slaughterhouses while the cattle ranching will be done by its partners.
Such a business model has resulted in one local company investing US$6 million towards reviving Dubane Ranch in Gwanda in the Matabeleland South Province after 20 years of inactivity.
The company is now breeding animals at the ranch, which used to be a holding facility, reports The Herald.
CSC which was one of the country’s largest employers before its fortunes waned due to a number of factors including loss of key export markets and stiff competition from private players after de-regularisation of the industry in 1992 as a result of a structural adjustment programme.
CSC enjoyed a monopoly since 1937 when it was formed but serious competition from private players plunged it into a viability crisis following sharp decline in cattle throughput.
A year later, the company had lost 50 percent of its market share to private players.
The Government overlooked the implications of liberalizing the industry when CSC had not been financially capacitated to stand competition from private players.
Since 1992, CSC largely survived on EU exports and had a US$15 million revolving payment facility with the bloc. Its annual quota of 9 100 tonnes of meat and used to earn at least $45 million per year from the EU export quota.
The facility was discontinued after the EU suspended imports in 2001 following an outbreak of foot and mouth disease.