Aico targets US$50m from share disposal

Martin Kadzere Senior Business Reporter
AICO Africa Limited could receive US$48 million for the sale of its 20 percent shareholding in Seed Co to a seed company Limagrain based in Britain, scoring a premium of 48 percent on the seed firm’s current value, sources have said.
AICO owns about 50 percent in Seed Co, Zimbabwe’s largest seed company. Sources familiar with the deal said Aico and Limagrain agreed on US$240 million as the value of Seed Co but subject to variations after final assessment of the business.

Limagrain hopes to gain a foothold in Southern Africa seed market through the acquisition of a stake Seed Co. In the region, Seed Co has established operations in Malawi and Zambia as well as Tanzania in East Africa.

“The completion of the deal is now closer and some formal announcements will be made soon,” said one source. Seed Co has been trading under cautionary since June 27 this year. Since then, its share value has fallen 3,5 percent from US82c.

AICO chief executive Mr Pat Devenish said in an interview yesterday “we are now attending to regulatory issues and once we are done, we will publish a circular to shareholders” soon.

He, however, refused to shed light on the value of the proposed transaction because the matter was “confidential.”
AICO intends to use the money realised from transaction to finance some operations under the group’s stable, group chairman Mr Innocent Chagonda said yesterday. Apart from 50 percent, AICO owns in Seed Co, the group also owns 100 percent in the Cotton Company of Zimbabwe and 49 percent in Olivine Industries.

The investments were made by Cottco when it was still listed on the Zimbabwe Stock Exchange. AICO was formed in September 2008 and its shares were subsequently listed on the ZSE when Cottco shareholders exchanged their shares for equity in AICO.

This merger also involved transferring the assets of Cottco to AICO and the later replacing Cottco’s listing on September 1 2008.
“At the moment, both managements are working on the transaction, but for us, it looks like a good deal,” said Mr Chagonda.

“Through selling part of the group’s stake in Seed Co, AICO will raise a substantial amount to finance some of the group’s operations while at the same time, remain very influential.”

Seed Co chief executive Mr Morgan Nzwere could not reveal much saying the matter was “private.”
Debt remains the greatest threat to AICO and the planned unbundling exercise, when it gets off the ground may be the group’s last survival chance, analysts say.

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