CBZ Holdings Limited (CBZHL) has withdrawn its proposed mandatory offer to minority shareholders of First Mutual Holdings Limited (FMHL) after the Competition and Tariff Commission (CTC) ruled to cap its stake in the insurer at 31,22 percent.
The move comes as part of regulatory measures aimed at maintaining market competition.
CBZHL had initially announced its intention to make a mandatory offer in a notice to FMHL shareholders on October 31, 2024.
The proposal was in line with Zimbabwe Stock Exchange Listings Requirements and the Companies and Other Business Entities Act, triggered by CBZHL's significant shareholding in FMHL.
However, following a detailed review, the CTC delivered its final decision on November 29, 2024, rejecting any further acquisition of FMHL shares by CBZHL.
Ms Rurobidzayi Jakanani, CBZHL's group chief governance officer, confirmed the decision in a notice issued yesterday.
"In light of the decision by the CTC, shareholders of FMHL are hereby advised that CBZHL will no longer be proceeding with the mandatory offer to the minority shareholders in First Mutual Holdings Limited. No further announcements will be made in respect of this issue," she stated.
Market analyst Shingai Dumba explained the implications of the CTC's decision.
"This is a clear signal from the regulator that market consolidation has its limits, especially when it involves dominant players like CBZHL.
"A 31,22 percent stake already makes CBZHL a key influencer in FMHL's operations, but allowing them to acquire more shares could have raised concerns about competition and market dynamics," said Ms Dumba.
The initial mandatory offer was widely seen as a strategic move by CBZHL to strengthen its foothold in Zimbabwe's lucrative insurance sector.
FMHL, one of the country's leading insurers, boasts a diversified portfolio spanning life insurance, health insurance, and real estate investments.
CBZHL's interest in FMHL aligns with its broader strategy of expanding its influence across financial services and insurance.
Ms Dumba noted that the regulatory intervention was reflective of a broader trend in Zimbabwe's market oversight.
"Regulators are increasingly vigilant about maintaining a level playing field.
"The insurance and financial sectors are critical to economic stability, and over-consolidation could risk creating monopolistic structures," she explained.
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For FMHL's minority shareholders, the decision preserves the status quo, ensuring that CBZHL remains a significant but non-controlling shareholder.
"The absence of a mandatory offer could leave some shareholders disappointed, as such offers often come with premiums above market prices," Ms Dumba added.
With the mandatory offer shelved, CBZHL may need to explore alternative growth strategies or find other avenues to increase its influence within FMHL.
Meanwhile, the decision underscores the CTC's role in shaping Zimbabwe's corporate landscape by balancing growth ambitions with competitive fairness.
