Zimbabwe: Savanna Acquires 75 Percent Stake in BMZ

Source from:  The Herald 10/30/2009

Harare - LEADING tobacco-processing firm Savanna Tobacco has assumed a 75 percent controlling stake in Burley Marketing Zimbabwe after buying out some minority shareholders in the company. Savanna Tobacco is now understood to control in excess of 15 million BMZ shares gradually acquired at a price of US$0,04 per share. Prior to the buy out that went extensive in July this year, one of the country's fastest growing tobacco firms controlled about 54 percent of BMZ. "In addition to the procurement of state of the art technology, Savanna Tobacco also took control of Burley Marketing Zimbabwe and now controls over 75 percent of the entity," said Mr Onias Gweru, Savanna Tobacco marketing manager. With swaying influence in BMZ, Savanna Tobacco will soon relocate its fast growing tobacco processing factory along Masvingo Road to BMZ premises in the Willowvale Industrial area Gary Jong, Savanna Tobacco operations director confirmed that the firm had outgrown its premises and would soon relocate to BMZ premises where there is more space for production facilities and offices. "The firm has outgrown these premises and we will soon move everything to BMZ where there is more factory space and bigger offices," he said. Savanna's relocation to BMZ is a result of phenomenal growth in size and capacity. "Savanna Tobacco is already preparing to move its production and office facilities to BMZ. "The BMZ facility will avail to Savanna warehousing space, which is over 26 000 square metres and over 120 offices and training rooms, several staff canteens and meeting rooms," said Mr Gweru. The firm's current factory size measures about 10 000 square metres. The BMZ premises will allow further investment in equipment and realisation of large-scale economies in procurement and storage of materials. Savanna Tobacco's growth has been a result of massive capital expenditure in key production equipment and huge demand for products. The firm has just acquired a 4,5 million Euro top of the range Protos 80 German made high-speed filter cigarette making machine. The cigarette maker produces 8 000 high quality cigarette sticks per minute. The nearest competitors can only produce up to 4 000 sticks per minute. Savanna now owns two Protos 80 cigarette-making machines. "The Protos technology is indeed what most reputable international cigarette manufacturers such as Philip Morris and JTI are running on. "Savanna Tobacco is the only company in Zimbabwe and in Sub-Saharan Africa outside of South Africa to run this world class type of equipment and we are excited to be associated with their success." said Mr Thorsten Philippi, a Technician from Hauni, Germany. Hauni are the suppliers of the equipment. Commissioning of Savanna's second Protos cigarette line has just been completed. There are only two such machines in Zimbabwe, owned by Savanna. This is expected to ramp up production by more than 50 percent, which would see annual production topping 4,6 million kilogrammes. The company is expecting delivery of another 2,6 million euros packing line in January next year, which will further increase output of finished product. This will see a 10 percent increase in factory workers. This is also expected to further sway market share in Savanna's favour, which already controls an estimated 60 percent of the market in Zimbabwe. Savanna is also now importing tobacco from regional and Asian countries as local supply is failing to meet its production requirements. Tobacco shortages have compelled Savanna to enter into a US$3 million tobacco contract farming arrangement for the 2009/10 season. Last season Savanna pumped in US$1,5 million into tobacco contract farming. Executive chairman Mr Adam Molai said the continued investment in the company reflected its faith in the future of this economy. "We are very bullish and upbeat about the future of Zimbabwe and Africa as a whole, and we aim to become the number two cigarette manufacturer in Africa within the next 10 years" said Mr Molai. More than 50 percent of Savanna's production finds its way to regional and Asian markets. Savanna's exports to South Africa, Zambia, Namibia, DRC, Mozambique, Botswana and the company would now expand into new markets given the additional capacity, with primary focus into the region, Africa and eventually the rest of the world. Enditem