ZSE-LISTED agro-implements firm Zimplow Limited said yesterday it was seeking to merge with Tractive Power Limited Holdings through the acquisition of an additional 42,79 percent equity in TPHL.
Zimplow, manufacturers of agricultural implements, already have a 57,21 percent stake in TPHL.
Subject to shareholders' and regulatory approvals, the company intends to acquire the balance of TPHL's issued share capital -- 66 206 418 shares -- through issuing 191,78 Zimplow shares for every 100 TPHL ordinary shares.
There is an option for a cash consideration of US$1,10 for every TPH ordinary share held.
On the conclusion of the transaction, Zimplow will own a 100 percent stake in TPH.
If all TPHL shareholders choose to receive Zimplow shares in respect of their shareholdings, the deal has the potential dilution of 18,47 percent on existing shareholders.
Conditions precedent to the transaction include the approval of TPH scheme of arrangement by a majority 75 percent of the vote by TPHL scheme members present and voting, either in person or by proxy.
The scheme has to be sanctioned by the High Court.
In addition, the transaction has to be approved by the Competition and Tariff Commission, the Zimbabwe Stock Exchange Listing Committee and the Exchange Control authorities.
A 50 percent vote will be required for the acquisition of the issued share capital of TPH not already held by Zimplow.
Upon fulfilment of the conditions, an application can be made for the delisting of TPH shares.
Three directors -- Mr Godfrey Manhambara, Mr Sibani Mngomezulu and Mr Timothy Johnson -- will be invited to join the Zimplow board.
Zimplow is in the business of manufacturing and distributing animal-drawn implements through its flagship division, Mealie Brand. The bulk of the company's customers are small-scale farmers.
TPH is into manufacture and marketing of a broad range of machinery and vehicles though its divisions -- Barzem (mining and construction), Farmec (agriculture) and Puzey & Payne (importer and dealer of Mazda, Mitsubishi and Forland.)
Zimplow said yesterday the transaction "fits in well" with the company's growth drive.
"By merging with TPHL," the company said in a circular to shareholders, "Zimplow will be able to position itself within this segment (engine-drawn implements) and benefit from the anticipated growth in demand for engine-drawn implements, consequently, consolidating the company's position in the agricultural sector.
"The merger will also enhance Zimplow's participation within the mining sector through exposures to Barzem. This will allow Zimplow to further diversify its revenue stream."
Zimplow said the merger would form a platform for enhanced organisational efficiencies and, in particular, cost reduction through staff rationalising by reducing duplicate roles.
The merged would also be able to raise significant debt and equity capital.