CHEMCO Holdings shareholders have approved the acquisition of four agro-based firms through a share swap deal.
The deal was u
nanimously approved without amendments at the company’s extraordinary general meeting (EGM) held on July 20, 2006.
Chemco will take over operating assets and liabilities of Agricultural Buying Services (ABS), TS Timber (TST), Farm-a-Rama and Highveld Harvesters.
The Zimbabwe Stock Exchange (ZSE) listed seed and agricultural chemical producer will issue 865 027 ordinary shares in control of directors to ABS and 991 842 to TST.
Chemco will also issue 2 342 733 and 1 457 801 ordinary shares to Farm-a-Rama and Highveld Harvesters respectively.
Chemco will issue a total 5 657 403 new shares to the four companies.
The acquisitions will boost Chemco’s balance sheet and bottom line as well as widen the company’s distribution network.
“The transaction will be effected through the acquisition by Chemco of the operating assets and liabilities of ABS, TST, Farm-a-Rama and Highveld Harvesters, as a going concern, with the business operations continuing as normal after acquisition,” said Chemco in a circular to shareholders.
The company said the acquisition was driven by the view to expand the scope of its operations and establish a platform for future growth.
“The consolidation of Farm-a-Rama with ABS, TST and potentially selected Agricura depots will provide a sound distribution platform,” Chemco said.
It added that the acquisitions would create economies of scale which are expected to reduce costs and increase competitiveness.
Chemco is the holding company of Agpy (100%), Agricor (67,48%) and Agricura (100%).
Agricura is one of the largest distributors of agro-chemicals representing more than 15 international manufacturers.
ABS is a wholly owned subsidiary of TSL, also an agro-firm, and has been operating for 25 years.
Chemco posted a profit after tax of $155,5 billion in the six months to April 2006.
ABS, a retailer of farming inputs and general hardware, recorded a post tax profit of $14,2 billion in the same period.
TST is a general retailer with bias towards supplies, timber -based products and the construction industry.
TST is also a wholly owned subsidiary of TSL with a significant branch network across to the country.
Farm-a-Rama is an independent retail concern involved in distribution of hardware, construction and agriculture related products.
Chemco said the number of shares to be issued to the respective companies was reached after a due diligence carried out by independent auditors.