ZIMBABWE – SeedCo International Limited (SCIL), has abandoned plans of acquiring its Zimbabwean subsidiary, Seed-Co Limited (SCL), after failing to get all the regulatory approvals.
According to the reginal seed producer, shareholders of both SCIL and SCL had approved the transaction earlier in March, but the External Loans and Exchange Control Review Committee turned down the proposal that same month.
“Approval for the transaction was declined by the External Loans and Exchange Control Review Committee on 26 March 2021. An appeal against the decision was made on 7 April 2021 and the External Loans and Exchange Control Review Committee upheld the decline decision on 8 June 2021.
“Pursuant to this adverse regulatory decision, SCIL and SCL have no option but to abandon the contemplated consolidation transaction and revert to status quo,” said SCL and SCIL in a joint statement.
The development means that SCIL and SCL will continue to operate as 2 separate companies, listed on the United States dollar denominated Victoria Falls Stock Exchange (VFEX) and Zimbabwe Stock Exchange (ZSE), respectively.
“The Zimbabwe Stock Exchange Limited hereby notifies the investing public of the resumption in trading of Seed Co Limited shares on the ZSE trading platform with effect from Monday 21 June 2021.”ZSE Chief Executive – Justin Bgoni
To this end, the Zimbabwean entity has resumed trading on the Zimbabwe Stock Exchange (ZSE)
“The Zimbabwe Stock Exchange Limited hereby notifies the investing public of the resumption in trading of Seed Co Limited shares on the ZSE trading platform with effect from Monday 21 June 2021,” said ZSE chief executive Justin Bgoni in a statement.
If the transaction would have gone through, the Zimbabwean subsidiary would have been part of the parent company and shifted to the VFEX.
This was in a bid to make Seed Co International Limited, which is also listed on the Botswana Stock Exchange, to be competitive and comparable to other Zimbabwean dual-listed counters.
VFEX was established by the Ministry of Finance and Economic Development in consultation with the ZSE, to allow dual-listed companies trade in foreign currency.
This was after the Ministry launched investigations relating to alleged participation in parallel foreign currency market activities by dual-listed companies in Zimbabwe.
The findings indicated that exchange rates were being derived from the comparison of dual listed share prices on the ZSE and other exchanges, and such implied rates were believed to be the leading indicators of speculative parallel foreign exchange rates in the country.
Seed Co International (SCIL), had made huge strides in closing the transaction as it had acquired 95% stake in Seed Co Limited (SCL) through primary and secondary offerings.
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