Tawanda Musarurwa

Regional seed producer Seed-Co International (SCIL) says there will be no changes to the structure of its board once it completes the absorption of the Zimbabwean subsidiary, Seed Co Limited (SCL).

In a move that marks a complete turnaround from the group’s 2018 unbundling, the Botswana Stock Exchange-listed Seed-Co International (which is secondarily listed on the US dollar denominated Victoria Falls Stock Exchange – VFEX) will be merged with the Zimbabwean entity.

It means SCL, which is listed on the Zimbabwe Stock Exchange (ZSE) will have to delist. The transaction is expected to be completed early next month.

However, management has said the transaction will not impact the present structure of the group’s board.

“SCIL does not intend to make changes to the board of SCL following the implementation of this offer and the subsequent de-listing of SCL from the ZSE,” said the group in an abridged notice to shareholders.

“However, should any changes occur, these shall be communicated in due course and through the appropriate channels when the decision is made.

“The merger, which is estimated at around $5,1 billion, will see SCIL acquiring up to 247 169 845 SCL shares (constituting SCL’s entire issued share capital) through an open market offer to be settled through the issuance of new SCIL shares on the basis of 1 SCIL ordinary share for every 0,98 SCL ordinary shares held.”

Just last week, SCIL shareholders approved resolutions to acquire the entire shares in SCL at an extraordinary general meeting.

Following that approval, the group has now moved to tender the open market offer to acquire SCL’s entire issued ordinary shares through an announcement or offer circular to be issued to SCL in accordance with the ZSE requirements.

Management has said the merger was necessitated by policy shifts in the local environment that saw SeedCo International move from the ZSE to the VFEX.

“The rationale for the offer is premised on SCIL’s strategic response to the changes in the status of its secondary listing in Zimbabwe brought about by policy initiatives introduced by the Government of Zimbabwe.

“It is now thought that transferring only one of the entities, SCIL, to the VFEX trading in US dollars while leaving SCL on the ZSE trading in Zimbabwe dollars will not protect value for shareholders,” said the seed producer.

“Against this background, SCIL deemed it strategically fit to integrate SCL’s operations under SCIL with a view to strengthening the profile of SCIL following its secondary listing’s migration from the ZSE to the VFEX.

“This integration of the Zimbabwean operations will make SCIL’s profile on the VFEX comparable to its dual listed counterparts whose make up comprise both international and Zimbabwean operations.”

SCIL’s secondary listing on the ZSE was terminated on October 23, 2020; and its shares were subsequently listed on the VFEX on October 26, 2020.

And on November 5, 2020, the Minister of Finance and Economic Development Mthuli Ncube announced the lifting of all fungibility restrictions on SCIL’s shares following the suspension of fungibility of the shares on March 15, 2020.

Meanwhile, management recently confirmed that shareholders of the merged entity will all receive US dollar dividends.

“US dollar dividends will be payable to all shareholders and the Zimbabwean strategic business unit will finance its dividend contribution to the group from exports of both seed and some shared services,” said chief executive Mr Morgan Nzwere.

In terms of the best scenario, management expects the merger to be completed by February 3.