Dairibord pursues merger/acquisition negotiations

LISTED food and milk processor, Dairibord Holdings Limited, says it is still pursuing merger and acquisition negotiations with an unlisted entity and has warned shareholders to exercise caution when dealing in the company’s shares.

“Shareholders are advised that Dairibord Holdings Limited is still in discussions with an unlisted entity, for a merger and acquisition transaction, which if successfully concluded will have a material effect on the price of the company’s shares,” said the milk processor in an update.

“Accordingly, shareholders are advised to continue exercising caution when dealing in the company’s shares until further notice.”

In the third quarter of last year, the group finalised the disposal of Dairibord Malawi and at the time of the disposal, liabilities of the subsidiary exceeded assets.

In its trading update for the period ended 30 June 2020 Dairibord said overall performance was not spared by headwinds in the operating environment. Raw milk intake was down from prior year largely due to escalating cost of stock feed affecting milk production. The company’s share of national milk production, however, remains high at 38 percent.

“Sales volume growth was impacted by reduced demand, particularly April and May due to Covid-19 restrictions,” it said. The company said its exports strategy achieved growth over the same period in 2019 despite 2020 targets being impacted by Covid-19 restrictions, depreciating regional currencies, and regional recessionary pressures.

The period was characterised by increasing input costs against limited ability to adjust selling prices.

“However, cost increases were below inflation. This was due to re-modelling costs particularly distribution and labour,” said Dairibord.

A few months ago, the milk processing company announced that it had increased shares for its employee share ownership trust to 17,9 million from 10 million.

The group established the DZL Holdings Employee Share Trust in April 2005. The trust was granted a loan amounting to $10 million by the company to acquire 10 million shares (constituting approximately 3,15 percent of the total issued share capital of the company at the time of establishment.–chronicles