|Olam’s Cottco plans put on hold|
|Thursday, 26 April 2012 00:00|
GLOBAL cotton giant Olam’s plans to acquire a 49 percent stake in AICO Africa Limited subsidiary Cottco could have hit a snag, as negotiations have been suspended. AICO, Cottco’s parent company, said in a statement yesterday negotiations were put on hold after directors failed to secure an agreement on the transaction.
“The directors (of AICO) could not secure an agreement on the proposed transaction and consequently the negotiations have been suspended,” said AICO.
The announcement came as a surprise following recent media reports suggesting negotiations were progressing well and a deal was imminent.
Earlier, sources from both companies had claimed there was a mutual understanding for the transaction to materialise, considering the benefits to both parties.
Had an agreement been reached, Olam would have acquired a 49 percent stake in Cottco, a subsidiary of Zimbabwe Stock Exchange-listed AICO, which has interests in cotton growing and ginning, seed production, the FMCG and horticulture industries.
Moreover, had the deal succeeded Olam would have integrated its ginneries across the country in a move designed to prevent competition with Cottco. Initially, AICO directors had proposed to raise US$50 million by way of a rights offer, but this was rejected by shareholders.
The group was hoping to recapitalise the business with proceeds from the sale of its unprofitable subsidiaries. In addition to the US$50 million, a further US$8 million was expected to come from the sale of the underperforming subsidiaries, Exhort and Scottco.
AICO Africa Limited, incorporated in Zimbabwe in July 2008, was formed and subsequently listed on the ZSE when the shareholders of Cotton Company of Zimbabwe Limited exchanged their shareholding in Cottco for a shareholding in AICO, the holding group. This merger also involved transferring the assets of Cottco to AICO and AICO replacing Cottco’s listing on the ZSE.
No official comment could be obtained from both AICO and Olam at the time of going to print yesterday.
Olam International Limited is a Singapore-based commodities supplier with interests in a number of countries.