HomeBusiness DigestFast-moving consumer goods manufacturers dominate mergers

Fast-moving consumer goods manufacturers dominate mergers

AT least 35% of the mergers handled by the Competition and Tariff Commission (CTC) since 2009 were in the manufacturing sector, while the education sector recorded the least number of tie-ups.

The commission says the expansion and diversification of fast-moving consumer goods (FMCG) portfolios drove the performance over the decade, while the presence of many public schools with government involvement which offer low fees could be the reason for low merger activity in the education sector.

The commission said the situation reflects the consumptive nature of the Zimbabwean economy for processed foods largely attributed to high urbanisation rates, while it is nearly impossible to merge operations if there are divergent cultural views, as is the case with schools.

“From the cases handled by the commission since 2009, 35% of the mergers handled were in the manufacturing sector dominated by fast-moving consumable goods (FMCG). These were prevalent as the producers of FMCG were expanding and diversifying their portfolios. The situation reflects the consumptive nature of the Zimbabwean economy for processed foods largely attributed to high urbanisation rates,” CTC director Ellen Ruparanganda said.

“From the sectors in which the commission has received request for approval to merge operations, the education sector has attracted the least number of mergers. Possible reasons for low merger activity could be the presence of many public schools with government involvement which offer low prices.”

In the first quarter of 2019, the commission handled seven mergers with three having been unconditionally approved while four are ongoing.

The approved transactions are the acquisitions of Lancet Laboratories Zimbabwe (Pvt) Ltd by Cerba Healthcare Africa, MacSteel Services Centre SA Pty Ltd by Robor Pty Ltd and Torre Industries Ltd by Main Street 1641 Pty Ltd.

Ruparanganda says the commission is yet to conclude the proposed 100% acquisition of Colonnade Reinsurance Company (Pvt) Ltd by WAICA Reinsurance Corporation PLC, proposed acquisition of Colovane Services (Pty) Ltd by Fuchs Petrolube SE, proposed merger involving Ashram Investments (Pvt) Ltd, Profeeds (Pvt) Ltd and Produtrade (Pvt) Ltd and the proposed 100% acquisition of MARS Zimbabwe (Pvt) Ltd by Cassava Smartech Zimbabwe (Pvt) Ltd. — Staff Writer.

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