Tinashe Makichi Business Reporter
Johannesburg Stock Exchange-listed ZAAD Investment Limited’s seed manufacturing subsidiary Klein Karoo Saad Bemarking wants to acquire an 80 percent stake in local seed manufacturer Agriseeds, The Herald Business can reveal.
ZAAD will acquire 80 percent currently owned by Royal Crown Investments Limited which is a joint shareholder with Chagaris (Pvt) Limited which owns the remaining 20 percent in Agriseeds.
Agriseeds managing director Mr Walter Chigodora confirmed the proposed acquisition to The Herald Business yesterday.
“Yes, I can confirm that a foreign company is in the process of acquiring an 80 percent stake in Agriseeds and this move will go a long way in boosting the company’s fortunes.
“The Competition and Tariffs Commission has already been notified of the acquisition and the deal is now awaiting approval. At the moment I don’t have financial details of the transaction,” said Mr Chigodora.
He said the Reserve Bank of Zimbabwe and the Ministry of Youth, Indigenisation and Economic Empowerment have also given green light for the deal to take place.
“We decided to engage a partner who is already doing well in the seed manufacturing sector and only the presence of the partner will leave the company in a solid position,” he said.
Well placed sources are of the view that the acquisition is set to revive the company and will go a long way addressing the company’s debt at the same time injecting working capital.
Sources went on to say the company agreed on the acquisition because it wanted to avoid possible liquidation.
In a bid to revive food production, Agriseeds with support from Hivos and SNV has been undergoing programmes to produce seed that can be sold to other farmers and organisations working in the sector to improve food security.
Hivos and SNV saw the collaboration with a private sector company as a more effective approach to improve the small holder agriculture as the company offers a ready market to the produce from the farmers.
Agriseeds is an established private company and actor in the Zimbabwean seed production industry.
Its core business is seed production and from inception its focus has been to engage small holder farmers in producing seed suitable for this small holder sector.
The company has been working with small holder producers since 1988 and has a wealth of experience in the area of seed production.
Agriseeds main activities involve contracting seed producers both small and large scale to produce seed mainly for crops grown by small holder farmers. Farmers get trained to produce certified seed.
They are given inputs on a loan basis and upon harvest they sell the seed to the company which then deducts the costs of inputs.
In 2009/ 2010 season Agriseeds worked with 1 000 small holder seed producers who benefited from the funds from the Netherlands Minister for Development Co-operation.
On the other hand, ZEED which is the parent company to ZAAD Holdings is an investor with a portfolio comprising agriculture, food and related investments.
The company operates in four segments: ZAAD Holdings (sole shareholder of Agricol, Chayton, Food and Agri and Beverages.
ZAAD and Chayton are subsidiaries, while Food and Agri and Beverages comprise investments in associated companies and equity securities.
The subsidiary segments operate mainly in the Republic of South Africa, Mauritius and Zambia, whereas the other segments operate mainly in the Republic of South Africa.