Dairibord, Dendairy merger and acquisition negotiations still ongoing

DAIRIBORD Holdings Limited (DHL) merger and acquisition negotiations with fellow dairy firm Dendairy Private Limited drags on with the former issuing its 10th cautionary statement to the effect that discussions were still ongoing.

The planned merger and acquisition transaction negotiations with Dendairy were first announced in July 2020 as DHL was suffering from a high cost of stockfeeds, which had been affecting its raw milk production levels.

The high cost of stockfeed is as a result of poor cereal crop production on the back of growing unfavourable weather conditions, forcing farmers to import grain resulting in stockfeeds being sold at higher prices to cater for costs.

“Further to the cautionary announcement published in the Press on July 1, 2020 and subsequent updates on July 22, 2020, August 13, 2020, September 4, 2020, September 25, 2020, October 16, 2020, November 6, 2020, November 27, 2020 and December 18, 2020, shareholders are advised that Dairibord Holdings Limited is still in discussion with an unlisted entity (Dendairy (Pvt) Ltd) for a merger and acquisition transaction,” DHL company secretary Samson Punzisani said in a statement.

“Accordingly, shareholders are advised to continue exercising caution when dealing in the company’s shares until further notice.”

Through the planned merger and acquisition, industry analysts say that DHL is attempting to leverage on Dendairy’s strategic investments into production of dairy products and its access to the regional market.

According to reports, in 2018, Dendairy started a project to expand operations at its Kwekwe plant, which would have seen the firm adding three new packaging lines to increase production from 4,6 million litres per month to eight million litres.

However, the project was reportedly delayed by funding and the COVID-19 pandemic which disrupted procurement.

As such, the susccessful conclusion of the discussions could lead to improved raw milk production for DHL while also boosting foreign currency earnings and local market share in the dairy sector.

Scandinavian private equity investment firm Spear Capital holds a stake in Dendairy.

Dendairy is a producer of dairy products and fruit juices in Zimbabwe. The company produces milk which does not contain preservatives or bacteria and is safe to store without refrigeration.

It also produces sour and flavoured milk, milk powder, yoghurt, butter, and ice creams.