COMPETITION and Tariff Commission (CTC) has approved, with conditions, the acquisition of Scanlink, Tredcor, Birmingham and Dagenham Investments property by farming implements manufacturer Zimplow Holdings.
Zimplow intends to acquire 100% shareholding in Scanlink, Tredcor Zimbabwe trading as TrenTyre, Birmingham Investments and Stand 30001 Dagenham Road, Willowvale township, all these in exchange for a total of 106 199 706 Zimplow shares.
According to the latest CTC report, post-merger Scanlink, Tredcor, and Birmingham will become subsidiaries of Zimplow, while Stand 30001 will be wholly owned by Zimplow.
“(The acquisition was) approved with conditions, that, the merged party or its successors in title, will not engage in tying and bundling of products,” the report reads in part.
CTC said the type of merger is conglomerate in nature with some horizontal elements.
In its trading update for the first quarter of this year, Zimplow revealed that it had a very positive start to the year with the first-quarter performance surpassing the corresponding period in the prior year.
The group experienced whole goods volumes growth across all business units except at Powermec, according to group company secretary Charles Chaibva.
“The environmental stability, mostly driven by currency reforms, infrastructure development projects and the prospects of a bumper harvest following a 2020/21 good rainfall season has supported capital expenditure. However, general equipment utilisation capacity in the first two months of the quarter was affected by lockdowns following a second wave of Covid-19 infections after the festive period,” Chaibva said.
“The group took advantage of the encouraging trading conditions to reduce the impact of Covid-19 on the supply chains by securing liquidity and therefore ramp up inventories in preparation of the year ahead,” he said.
On operations volumes at Barzem were 13% ahead of prior year with the product mix largely skewed towards earthmoving equipment for the infrastructure development sector, unlike in the prior year where 50% of the units came from CAT gensets and lift trucks.
Overall, the after-sales performance, driven by 34% growth in parts sales, has been ahead of prior year despite workshop volumes losing hours to Covid-19 lockdowns.
Tractor volumes doubled and implements were 76% ahead of prior year. After-sales performance was 38% ahead of prior year.
“The unit continues to focus on capital allocation and working capital management to ensure that it meets the customers’ farm equipment needs upon order,” he said.
CT Bolts has continued to develop new relationships and markets. For the quarter, volumes across the range grew by 24% compared to the same period last year.
Chaibva said the positive rainfall season provided a platform for Mealiebrand’s volume growth. Local implements were 39% ahead of prior year. Spares uptake improved with 86% and 68% growth against prior year in the local and export markets respectively.
He said they are closely engaging the supply chain following the general increase in steel prices experienced in the last 6 months.
Chaibva said Powermec was significantly affected by reduced activity as a result of Covid-19 lockdowns. Volumes slowed down by 33% on average in both the whole goods and after-sales.
On outlook, Chaibva said while the group continues to put effort in Covid-19 prevention protocols, the uncertainty and risks brought about by the pandemic requires constant review of business models in terms of levels of working capital elements, cost containment and capacity improvement projects.
“At present, the group is stable and of a sound going concern. The increased uptake of the Covid-19 vaccination, as we navigate the pandemic, provides better prospects for the Group in 2021,” he said.
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