Senior Business Reporter
Shareholders who do not accept Seed-Co International (SCIL)'s open market offer to acquire local subsidiary Seed-Co Limited (SCL)'s entire issued ordinary shares on the Zimbabwe Stock Exchange (ZSE) may find themselves holding on to untradeable equity.
As at the latest update, 84 percent of SCL shareholders had accepted the offer.
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 delist, and according to indications from the group will delist today (Tuesday).
In its latest update on the matter, the group said "the irrevocable and unconditional acceptances of the offer by SCIL to SCL shareholders closed at 84 percent on Tuesday February 23, 2021.
Seed-Co said the secondary offer will close today: "In terms of the offer timetable, the last day to trade in SCL shares was February 23, 2021. However, the secondary offer is still open and will close on March 2, 2021," said the group.
"As specified in the circular to SCL shareholders published on January 13, 2021 and the subsequent announcements made thereafter, and in accordance with the ZSE Listings Requirements, SCIL will proceed to cause the voluntary delisting of SCL from the ZSE upon the closure of the secondary offer on March 2, 2021.
"Consequently, once delisted, any remaining SCL shareholders will not be able to trade their shares freely in the absence of a public market platform and an easily determinable reference price," said the group.
The merger, estimated at around $5,1 billion, sees 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.
Seed-Co added that if the offer is not fully accepted, it will invoke the provisions of the Companies and Other Business Entities Act (Chapter 24:31) to acquire any remaining shares after the closing date of the secondary offer.
Recently, stock market analysts Imara Zimbabwe said Seed-Co shareholders are getting the short-end of the stick as they will not be able to purchase additional equity in the merged entity after the transaction.
"We do not support that proposal as it would result in Seed Co Zimbabwe delisting from the ZSE. For domestic investors based in Zimbabwe it will, therefore, not be possible to invest Zimbabwe dollar savings into the Seed-Co group again; SCIL shares can only be bought in Botswana for pula or on the VFEX for US dollars," said Imara in a research note.
"Under current exchange control regulations it will be onerous if not impossible for Zimbabwe pension funds and private individuals with no access to foreign exchange to do so.
"In our view this is a great shame. For existing domestic shareholders in Seed-Co Zimbabwe, they would still have ownership of Seed-Co Zimbabwe via SCIZ but they would most likely never be able to acquire more shares in the group again."