IDC to dispose of 51pc Olivine stake

The Industrial Development Corporation of Zimbabwe is set to dispose of 50,69 percent of its interest in Olivine Holdings for a consideration of $6,74 million.

The disposal, however, is subject to approval by the beneficiaries of the AICO Olivine Holdings Share Trust at the annual general meeting to be held on February 20.

The AGM will seek to dispose only of the 49,31 percent previously held by AICO while the remaining 1,38 percent will come from the IDC stake.

The trust received the shares (14,17 million shares) owned by AICO by way of donation.

However, IDC exercised its pre-emptive right to purchase the shares on a back-to-back basis. IDC canvassed for bidders and the tender process resulted in a bidder whose price and strategic fit was considered appropriate.

Indications are that Asian company Wilmar International, a firm which also has an interest in Surface Investments, will acquire the stake. The Competition and Tariffs Commission last year okayed the merger between Surface and Wilmar.

Wilmar’s business activities include oil palm cultivation, oilseed crushing, edible oil refining, sugar milling and refining, specialty fat, oleochemical, biodiesel and fertiliser manufacturing and grain processing.

At the core of Wilmar’s strategy is an integrated agribusiness model that encompasses the entire value chain of the agricultural commodity processing business, from origination and processing to branding, merchandising and distribution of a wide range of agricultural products.

It has over 450 manufacturing plants and an extensive distribution network covering China, India, Indonesia and 50 other countries.

The proposed Wilmar partnership will not only see further growth for the company in the South African market, but with operations in Zimbabwe and Botswana already, it will also see an increased footprint across the African continent, as it establishes operations in additional Africa markets within the coming years.

With Wilmar culinary cooking oil products already stocked in major local retailers of South Africa like Shoprite, Pick ‘n Pay, Spar and Massmart the upcoming investments in Southern Africa signifies added benefits for Olivine Industries to penetrate the regional market.

“This partnership between Wilmar International and Olivine Industries promises further opportunity for extensive distribution and expansion into Africa,” said sources familiar with the transaction.

Sources say the bid submitted by Wilmar has already been accepted and now awaits approval from the Competition and Tariff Commission.

Innscor Africa is also among the investors who submitted bids for Olivine Industries but failed to meet the required specifications.

Last year the Olivine board asked its financial advisers to evaluate all competing bids in terms of price, strategic intent and proof of funds and make recommendations to the board and shareholders by October 31 the same year. Wilmar came out top and its bid was accepted.

The offer price of $6,74 million translates to a $12,7 million valuation for the company. The $6,26 million attributable to the Aico stake is equivalent to $0,44 per share.

Earlier attempts to secure investors to inject fresh capital into Olivine had failed with a total of 78 potential buyers having been short-listed, but virtually all of them eventually decided against investing in the company.

Last year, IDC announced Olivine will be merged with Surface Investments. — Wires.