Zimbabwe: Savanna Yet to Assume Full Control of BMZ

Source from:  Financial Gazette 10/10/2009

Savanna Tobacco is still to mop up all the shares in Burley Marketing Zimbabwe (BMZ) to complete the take-over of the business. In July, Savanna announced the acquisition of BMZ in a transaction that marked one of the milestones in the company's quest to dominate Zimbabwe's tobacco processing and distribution industry. The company is, however, still to assume full control of the business because other minorities in BMZ have not made the decision to dispose of their stake as yet. Savanna is now aggressively mopping up the remaining shareholding in order to assume full control of the company. The shares will be bought at a price of US$0,04 per share through Terniville Enterprises, an investment vehicle established by Savannah for that purpose. Executive chairman Adam Molai could not disclose Savanna's current shareholding in the business saying it had become more of a moving target because of the processes currently underway to gain full control of BMZ. "It is work in progress, the position is cha-nging everyday," Molai said. "It is difficult to say off the cuff our shareholding in BMZ. The response from minority shareholders has been extremely well. We will be able to know our position in December." It is however, reliably understood that Savanna is now controlling 15 million shares in BMZ out of the shares on its register.Sources said the deal had been delayed by the fact that hundreds of farmers holding the BMZ stock were scattered across the country and information about the transaction had been slow to reach them. Savanna had been positioning itself to take over market dominance in Zimbabwe through expanding production capacity and contracting emerging farmers to provide the golden leaf. In March Savanna said it had entered the tobacco contract farming schemes to increase the flow of the raw material into its plant. About US$3 million was earmarked for the 2009/10 farming seasons after the company had earlier bankrolled production of US$1,5 million worth of tobacco this season. Savanna is the producer of four Pacific brands namely Breeze, Storm, Blue and Mist. Over the years, the company has experienced phenomenal growth in output from 500 million cigarettes in 2005 to two billion sticks last year. Output is projected to increase by more than 50 percent by the first quarter of 2010 to 4,5 billion cigarettes if its euro four million plant expected to be purchased before the end of the year is brought on line. Enditem