ZIMBABWE – Dairibord Zimbabwe Ltd (DZL), Zimbabwe’s largest milk processor has entered into a strategic alliance and share subscription agreement with its single largest supplier of raw milk, Tavistock Estate Limited.
This development will see the parties collaborating in the expansion of a sustainable raw milk supply business model set to unlock shareholder value.
According to a press release by the company informing share-holders of the alliance, “The Directors of Dairibord Holdings Limited (Dairibord) would like to advise all stakeholders that Dairibord Zimbabwe (Private) Limited (DZPL), its 100 percent owned flagship subsidiary, whose primary business is manufacturing and marketing of milks, foods and beverages, and Tavistock Estate (Private) Limited (Tavistock), the largest single supplier of raw milk to DZPL, have entered into a strategic alliance and share subscription agreement.”
Both parties are set to benefit immensely from the arrangement through combined consolidation of competences and experiences on future milk supply growth strategies.
The agreement will go a long way in helping fund Tavistock’s operations via loan guarantees. More so, DZPL will be accorded voting rights in the former and therefore an opportunity to decide on matters of importance.
“The strategic alliance includes a milk supply agreement and a joint development agreement that will govern the collaboration of the parties involved. Both parties will combine their competences and experiences on future milk supply growth strategies.”
“DZPL will actively assist Tavistock in securing structured finance through loan guarantees and other capital raising mechanisms to achieve mutual growth targets. In addition, DZPL will subscribe to preference shares in Tavistock that will guarantee DZPL a board seat, dividends and voting rights in Tavistock,” stated the company.
The strategic alliance, alternatively a “related party transaction”, had been entered within the confines of the law as and declared “fair and reasonable”.
“As at the date of this announcement, the Board of Directors of Dairibord can confirm that this transaction qualified as a related party transaction and that the transaction has been declared as fair and reasonable in pursuance of the provisions of section 270 of statutory instrument 134 of 2019.”
“The Fair and Reasonable opinion will be available for inspection for 28 days at the registered office of the issuer,” added the company.
Meanwhile, DZPL is geared for enhanced growth after the Government through the Ministry of Finance and Economic Development proposed in the 2020 National Budget to “extend and increase the excise duty free ring-fenced import quota from 175 000 litres (of raw milk) to 200 000 litres per annum for a period of two years beginning 1 January 2020.”
The decision was informed by the alleged insufficiency of locally produced raw milk to meet the requirements of dairy milk processors.
Combined with such significant contribution from the Government front, the alliance with Tavistock will unlock notable growth opportunities for both Dairibord Zimbabwe and the broad local dairy industry alike, reports the Herald.