The Competition and Tariff Commission (CTC) is expecting to see more mergers and acquisitions in 2019 after the statutory body handled 18 mergers and acquisition transactions in 2018.
The CTC, a statutory body established under the Competition Act (Chapter41:28) with a mandate of implementing the country’s competition policy and execution of trade tariffs policy, believes increased mergers and acquisitions will be a result of firms focusing on synergy potential, while those companies with a strong balance sheet are well positioned for exercising growth options through acquisitions.
“The commission expects to see more mergers in the manufacturing sector since most of the firms are still to realise increased capacity utilisation,” said CTC.
In 2018, the CTC handled 18 mergers and acquisition transactions, as companies sought to grow their footprint on local and regional markets.
Of the 18 applications received, 12 companies have completed the process, while six companies are yet to complete the transaction.
Mergers and acquisitions completed include Old Mutual and Medsearch Industries, Axia Corporation and Geribran Services, The National Oil and Infrastructure Company of Zimbabwe and Petrozim, Pioneer Foods and Heinz Foods SA.
Another notable transaction carried out in the period was the acquisition of a 49 percent stake in Restapedic (Pvt) Limited by TV Sales and Home, the acquisition of 46,68 percent shares from Allied Insurance Company by Nzou Limited and acquisition of Hunt by Adam and Associated (Pvt) Limited.
Ongoing transactions include National Foods and Gain, Pathfinder Luxury and Intercape, Champions Insurance and Skinners auto body repairs, Dallaglio and Delta Gold, Cebra Health Care Africa and Lancet Laboratories.
“The commission handled a total of 18 mergers and acquisition transactions in 2018, as companies continue to consolidate their operations. 45 percent of mergers encompassed Zimbabwean firms with the desire to expand their business and 45 percent of involved firms are the African region.
“From investigations handled, 55 percent of the mergers and acquisitions transactions were approved without conditions, 10 percent were approved with conditions and 35 percent were still ongoing,” said the CTC.
According to the CTC the bulk of mergers were mostly witnessed in the Insurance and Reinsurance Industry accounting for 22 percent of all merger activities for the financial year.
Manufacturing and Healthcare were in second place both accounting for 17 percent of all merger activities in the period under review.
Industrial gases, motor, transportation, mining sectors each contributed 6 percent of merger activities, while Steel, Petroleum and Motor spares each accounted for 5 percent of activities.
“The insurance sector attracted the highest volume of merger activities (22 percent), an example was Nzou Limited and Alliance Insurance where Alliance will get skills transfer and FDI from Mauritius into the local insurance sector.
“Similarly, the health care sector also had a 17 percent share of cases and an example is Adcock Ingram Health and Genop Holdings merger transaction.
“Adcock is a South African pharmaceutical company which manufactures, markets and distributes a wide range of healthcare products.
“The manufacturing sector had the second largest share (17 percent) and companies thereto were into chemicals and chemical products manufacturing, bedding, and supply process optimisation products. Fast moving consumable goods constituted about 11 percent of cases and the petroleum sector had 5 percent,” said the CTC.