HomeBusiness DigestTedco set to acquire Innscor retail divisions

Tedco set to acquire Innscor retail divisions

Conrad Dube

TEDCO Ltd and Innscor Africa Ltd are currently in negotiations for the sale of Innscor’s retail and manufacturing divisions, TV Sales & Hire and Capri to Tedco.

Sources said Tedco intended to consolidate its retail and manufacturing divisions before the mooted unbundling into two separately listed companies on the Zimbabwe Stock Exchange (ZSE).

But Tedco group chairman Simba Mangwende said: “We will pursue whatever transaction that makes financial sense but the acquisition of TV Sales & Hire and Capri is news to us at Tedco.”

Innscor senior management was not available for comment as they were said to be out of the country.

“TV Sales & Hire will blend very well with Tedco’s retail division, Radio Ltd and this would enhance the group’s earnings going forward,” said an investment analyst.

He said a split in the company would see the retail division maximising on capacity to compete with other furniture and clothing retail companies.

The group last month said it was considering unbundling into two divisions – retail and manufacturing – in a bid to enhance shareholder value.

“It is still at consideration level and we are most likely to unbundle to maximise value in the company. There are other methods that we can use to enhance value like acquisitions and expansion into other export markets,” the chief operating officer, Mark Duff was quoted as saying.

Mangwende said the unbundling consideration was aimed at giving shareholders a choice between the manufacturing and the retail companies.

If approved by shareholders, the unbundling would culminate in the formation of retail and manufacturing companies that would subsequently list on the local bourse.

The manufacturing arm has six divisions that major in lounge suits, bedding and general furniture while the retail division comprises four units specialising in furniture and clothing.

In pursuit of the regional expansion Tedco is establishing an Export Processing Zone in Bulawayo to service demand from Botswana and Namibia.

The company said exportscontributed 35% to the manu-facturing division turnover but was confident the figure would increase slightly to about 40% once the EPZ was fully operational.

Commenting on the domestic trading situation, the company said all divisions had met their expectations during the last six months and the trend was likely to continue.

“Furniture and electrical sales have slackened because of the lack of disposable income among the customers. Clothing sales have been strong and margins across the board are firm,” Duff said.

The market reacted positively to the news, pushing Tedco share price to $70, gaining 94% on last year’s price of $36.

Analysts said Tedco’s share price was undervalued and that although the market had shown interest in the company it was now waiting for the formal announcement of the deal.

“The market seems to have reacted favourably to the news hence the jump in the share price. But currently the market seems to be cautious as it awaits a tentative date for both the unbundling process and the acquisition of the said companies,” the analyst said.

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