FARMING implement manufacturer Zimplow Limited is offering to acquire 100% ownership in Scanlink (Private) Limited, Tredcor Zimbabwe (Private) Limited and Birmingham Investments (Private) Limited to diversify its products and services.
According to Zimplow, the proposed transaction will be effected through an offer to acquire the entire issued share capital of Scanlink, Tredcor Zimbabwe, and Birmingham Investments. Apart from the three firms, Zimplow will also acquire a new property in Harare's Willowvale industrial area.
Zimplow announced this in a circular to its shareholders released last week .
"The proposed transaction will be effected by way of ZIMW (Zimplow) making an offer to acquire the entire issued share capital of Scanlink, Tredcor Zimbabwe, Birmingham Investments and 100% ownership of the target property to be consummated by way of a swap of shares in the target companies for shares in ZIMW," said Zimplow chairman Thomas Chataika in the circular.
"... With no cash alternative as well as an issuance of shares to the current owner of the target property, Essential Proposition Properties (Private) Limited ('EPP') with no cash alternative ('the Offer')."
The negotiated value of the acquisition at the effective date for the companies and proposed property will be settled via an issuance of 106 199 706 new Zimplow ordinary shares that are listed on the Zimbabwe Stock Exchange.
"On successful completion of the transaction, Scanlink, Tredcor Zimbabwe and Birmingham Investments will become wholly owned subsidiaries of ZIMW and ZIMW will also become the owner of the target property. Zimplow will remain listed on the Zimbabwe Stock Exchange," Chataika said.
He said that over the years Zimplow had constructed a portfolio of complementary businesses and brands focused on manufacturing and distributing farming, mining and construction industry implements.
Scanlink is focused on distributing large vehicles, long-range buses, coaches and generators with the main customers being in the mining industry. On the other hand, Tredcor Zimbabwe is focused on the distribution of Goodyear tyres and the re-treading of a variety of brands.
Zimplow says the two businesses are "complementary" to its existing portfolio which entrench the company's market position in the mining and construction industries.
"Additionally, the acquisitions will provide the company with increased product diversity and market share in the transport and logistics industry," Chataika said.
Birmingham Investments is a foreign currency revenue generator and owns Birmingham Property (Private) Limited which has an immovable property known as 63/65 Birmingham Road, Southerton, Harare.
While the proposed property is currently vacant, when it was previously leased by a tenant a monthly rental of US$10 350 or US$124 200 annually was paid.
"The expenses of the transaction, amounting to approximately ZWL$7.44m which relate to legal, transfer secretaries, advisory fees, various printing, distribution, regulatory fees and such other charges, will be paid by Zimplow," the company said.
An extraordinary general meeting (EGM) will be held on October 15 where Zimplow shareholders will vote on whether to proceed with the offer with the results of the EGM being released on the following day.
In its trading update for the first quarter ended March 31, 2020, Zimplow reported having increased its revenue by 896% over the 2019 comparative period while profit after tax was also ahead by 1 111% compared to 2019.