Seed Co floats consolidation plan
... share swap deal may end with a ZSE delisting
SEED CO Limited (SCL) directors yesterday scaled up a long-cherished plan to consolidate regional and domestic operations following the group’s partial unbundling last year. The Pan-African seed firm operates under two wings — the Zimbabwe Stock Exchange (ZSE) listed SCL, which serves the domestic market and Seed Co International Limited (SCIL), which has been on an aggressive regional incursion since establishment in Botswana 20 years ago.
The foreign operation has a primary listing on the Botswana Stock Exchange and a secondary listing on the Victoria Falls Stock Exchange ( VFEX), where it became the first counter to be quoted when the forex-only bourse opened on October 26.
Until then, SCIL had traded its stock on the ZSE.
Under the plan announced yesterday, SCIL offered to take full control of SCL and delist it from the ZSE.
The offer closes on February 3.
If 35% of SCL shareholders give the nod to the offer, it will see the regional unit taking over a control block in SCL.
The full operation will trade its stock on the VFEX, where SCIL listed following dramatic events on June 26 last year, when terrified authorities ordered the suspension of trades in three fungible counters to “protect” a free-falling Zimbabwe dollar.
“SCIL hereby offers to acquire ... from SCL shareholders all their SCL ordinary shares for the offer consolidation,” SCL said in a circular to shareholders on Wednesday.
“SCL shareholders, who accept the offer by the closing date, shall receive one new SCIL share for every 0,98 shares they hold in SCL. The share swap is based on the relative intrinsic values of SCIL and SCL determined through an independent valuation of the two companies. The share swap ratio represents a premium of 5% on the average 30-day and 60-day VWAPs [volume weighted average price] of SCIL and SCL shares as of June 26, 2020,” the circular noted.
“Subject to the offer being accepted by shareholders of SCL to the extent that SCIL’s shareholding in SCL reaches more than 70% or SCL has less than 300 shareholders, SCL will apply for voluntary delisting of SCL from the ZSE in terms of section 11 ... of the ZSE listing requirements,” the circular said.
“The rationale for the offer is premised on SCIL’s strategic response to the changes in the status of the secondary listing in Zimbabwe brought about by policy initiatives introduced by the government of Zimbabwe. It is now thought that transferring only one of the entities, SCIL, to the VFEX trading in United States dollar while leaving SCL on the ZSE trading in Zimdollar will not protect value for shareholders,” the statement noted.
SCIL was incorporated in Botswana in 2000.
The operation was wholly owned by SCL until two years ago, when SCL shareholders approved a partial unbundling and separate listing of SCIL.
SCIL was partially unbundled through a dividend-in-specie of its shares to SCL shareholders, but the local operation retained 27% shareholding in the firm.
The two firms operate under the “African Seed” brand, with their operations falling under the same management and sharing various support and technical functions.