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Zimplow acquired 57,21 percent of the issued share capital of Tractive Power in June from an investment vehicle owned by the Reserve Bank of Zimbabwe.
It decided to buy a stake in TPHL as it saw a potential to create value for shareholders through product and market diversification in the mining and agriculture sectors.
In a circular to shareholders, Zimplow said it has been demonstrated that the best way to unlock value for the shareholders was to merge the two business units.
“Against this background, the directors are proposing that, subject to shareholder and regulatory approvals, your company: acquires the balance of the issued capital of TPHL, being 66 206 418 TPHL ordinary shares, through the issue of 191,78 Zimplow shares for every 100 TPHL ordinary shares held, or a cash consideration of $0,10 for every TPHL ordinary share held. On the conclusion of this transaction, Zimplow will own 100 percent of the issued share capital of TPHL.”
Zimplow would also change its name to Zimplow Holdings Limited.
It is hoped that the merger will enhance Zimplow’s participation in the mining sector through exposure to Barzem Enterprises.
“This will allow Zimplow to further diversify its revenue stream, and thus to some extent, smoothen the seasonal sales pattern the company experiences.
“Government and various multilateral institutions expect the mining sector to drive Zimbabwe’s growth in the medium-term thus allowing Zimplow to benefit from this growth.”
Traditionally, Zimplow’s business has been the manufacture and distribution of animal drawn implements through its flagship division Mealie Brand.
The bulk of such implements are purchased by subsistence and small-scale farmers who have post the multi-currency system been recapitalising their farms.
It is also believed that as investment in the agricultural sector continues to grow, medium to large scale commercial farmers will start recapitalising their farms as well.
“In particular, this spectrum of customers is expected to start purchasing engine drawn implements.
“By merging with TPHL, Zimplow will be able to position itself within this segment and benefit from the anticipated growth in demand for engine drawn implements and consequently consolidating the company’s position in the agricultural sector,” said Zimplow.
Online Reporter