ZIMBABWE – Concerns have been raised over the alleged monopolistic structure of the proposed merger between the Zimbabwe’s two stocked manufacturing giants, National Foods and Profeeds.
The companies plan to set up a new stock feed company, which will be run as a separate entity.
African Feed Mills private Limited, the new company will be 60% owned by Profeeds while National foods will take up the balance.
Concerns of an impending monopoly are now threatening the proposal deal at a time when the transaction is awaiting the Competition and Tariff Commission (CTC) approval.
Information in the market says CTC raised concerns over the transactions and has written to NatFoods management to clarify some competition issues around the transactions.
NatFoods Managing director Mike Lasbrook confirmed this week that communication has been made between the company and the competition authorities in line with the transaction.
“There is nothing uncompetitive about the transaction as it is part of our big plan to improve efficiencies in our operations and also ensuring cost effectiveness,” said Mr. Lashbrook.
“This transaction will go a long way in improving our cost structure from the fact that the government has introduced value added tax on meat products. This is certainly going to have an effect on the stock business as well,” he said.
The NatFoods is expected to ensure that the groups use their capacity to the fullest while it will help boost against competition from the impeding recapitalization of two of its major competitors, Agrifoods and Blue ribbon industries.
Under the arrangement the two companies will sell their respective stock feed manufacturing assets and lease their immovable properties to the new company for the purposes of manufacturing stock feed.
The total transaction value is estimated to about $ 10 million.
According to the documents in last year’s publication, both NatFoods and Profeeds will shut down their stock feed manufacturing units in the event that in future the newly formed company will manufacture as well as wholesale and retail stock feed.
NatFoods and Profeeds will also maintain their main line of business other stock feed, independently of each other.
The shareholding of the businesses shall remain the same and shall not be affected by the proposed transaction.