The Competition and Tariff Commission (CTC) has given the greenlight to six mergers and acquisitions (M&A) this year, a move expected to have a significant impact on the market, as companies seek to expand their presence and diversify product offerings.
All deals were approved without conditions, according to minutes of CTC board meetings held on July 23, 2024, and August 9, 2024. The approved deals include Yokama Investments’ acquisition of Clover Leaf Panel Beaters, Consolidated Building and Mining Trading (CBM) Ltd’s purchase of Jojo Zimbabwe’s assets, and AIIH Ltd’s acquisition of Joseph Investments Holdings.
Other notable transactions include Wealth Access Investments Managers which acquired Zumbani Capital, Deedsgate Investments’ acquisition of Thelron Investments and Inter-Africa Civils’ acquisition of Greenback Trading in exchange for 450 ordinary shares.
According to economists, the drivers behind these M&A deals were multifaceted.
Some of the key factors included market expansion, diversification, and growth opportunities.
These trends are consistent with global M&A patterns, where companies have been using strategic acquisitions to drive growth, improve efficiency, and stay ahead of the competition.
“There are many factors that can drive the rise in M&A in Zimbabwe. These include strategic growth reasons. M&As are an opportunity for companies to expand their market presence and diversify their product offerings,” economist Stevenson Dhlamini said.
“They may also be driven by the need to consolidate market power and reduce competition. Furthermore it is also a reflection of the increased awareness of the power of owning big businesses beyond MSMEs (micro, small and medium enterprises) which have been dominating the local entrepreneurial landscape. It also shows that Zimbabweans now have a deeper understanding of structured finance.”
Clover Leaf, a motor body repairer, ceased operations in March 2023 after failing to meet shareholder’s financial expectations in previous years. Yokama operates in the same market as its target.
The company seeks to resuscitate Clover Leaf’s operations, and merge with its existing business. JoJo Zimbabwe, which manufactures plastic water tanks, is a subsidiary of JoJo South Africa, whereas Consolidated Building and Mining Trading Limited is an investment holding company trading in diamond drilling consumables, construction materials and provision of diamond drilling services.
The merger, according to CTC, follows the intention by JoJo to disinvest from the Zimbabwean market.
The commission said AIIH Limited and Joseph Investments Holdings were foreign entities, and in Zimbabwe AIIH operates through United Refineries Limited (URL), whereas Joseph Investments operates through AFGRI Zimbabwe.
AFGRI Zimbabwe is involved in the sale of new and used agricultural equipment and parts, and the servicing of the equipment, while URL is a producer of edible oils, mealie meal, laundry soaps and bath soaps.
AIIH Limited sought to acquire 25,56% of the ordinary shares in Joseph Investments Holdings.
Wealth Access is a wholly owned subsidiary of Capital Africa Investment Holdings Limited, an investment management entity providing asset management services. Zumbani Capital owns 28,9% shares in Masimba Holdings and 22,9% in Proplastics, respectively.
Thelron is a special purpose vehicle owned by the McDiarmid family incorporated for the purpose of holding one industrial warehouse.
Deedsgate is a special purpose vehicle owned by Surjay incorporated for purposes of this transaction.
IAC and Greenback are Mauritian registered global business licensed investment holding companies with interests in Zimbabwe and the region.
In Zimbabwe, IAC owns Bitumen World (80%) and Autostrada (100%), whereas Greenback owns R Davis and Company (80%), and R Davis Developments (100%).