CTC approves CBZ, First Mutual merger

The Competition and Tariff Commission (CTC) approved three mergers in the fourth
quarter of 2022, including the acquisition by CBZ Holdings (CBZ) of a majority interest in
First Mutual Holdings Limited (FMHL) and OK Zimbabwe swoop for Food Lovers Market.

Zimbabwe Stock Exchange-listed financial services provider, CBZ, said the transaction
was designed to create a pan – African bank starting with the merger with FMHL.

CBZ acquired 31,22 percent of FMHL from NSSA and according to the terms of the contract,
the consideration being a blend of cash and a share swap under a 30/70 ratio. The rationale
behind the share swap was to leverage CBZ’s strong share price on the Zimbabwe Stock
Exchange and use it as currency for this transaction.

The bank’s management believes the transaction will unlock further value for existing
shareholders and allow for more wealth creation.

CBZ also has the desire to become a regional player. The acquisition of FMHL is a key part
of this process as the group has successfully established itself in other jurisdictions within
SADC and the goal of this merger is to maximise shareholder value.

The bank also sees the merger as a way to gather the best financial talents in this country
under one roof and use them to build and develop Zimbabwe as well as make the country a
regional financial hub.

CTC said “Analysis showed that the merger might result in foreclosure, especially in the
banking market and leads to a significant enhancement of CBZ bank’s market power, postmerger, as its deposits are likely to improve through the target’s input towards its sister company.

“In light of the above, the transaction was approved with the following conditions that
CBZHL, its affiliates, and its successors in the title should allow its subsidiaries and those
of FMHL to continue operating as separate entities and FMHL, its affiliates and its
successors in the title should continue operating on non-discriminatory terms and
conditions.”

CTC also noted that it had granted permission for OK Zimbabwe to acquire the franchising
rights of Food Lovers Market in Zimbabwe.

Food Lover’s Market is a South African supermarket chain that operates franchised
grocery stores and convenience stores in Southern Africa and in addition to Zimbabwe has
other stores Botswana and Namibia.

Maxen Karombo, the group’s chief executive of OK Zimbabwe, told an analyst briefing in
December last year that the company would have the Food Lovers territorial rights for the
whole country except for the Greendale branch, which is under a different franchise
arrangement. Mr Karombo said the Food Lovers Market franchise would give OK Zimbabwe
a good space to grow in super-premium retail operations from the services and products
that it will offer.

“We will have synergies across the group and have partnerships with local producers,
suppliers and shoppers. We will be investing into this brand and we will look at new
stores,” he said.

He noted that Zimbabwe was one of the growth areas of Food Lovers, which has 110 stores
across the region. He said they have six eateries and 246 coffee outlets throughout the 
region servicing in excess of 380 000 customers per day.

Said CTC “Given the analysis and stakeholder concerns, the merger was approved on
condition that: OKZL, its subsidiaries, affiliates, and successors-in-title shall, maintain or
improve the existing trading agreement conditions with wholesalers and farmers that
include inter-alia delivery and payment terms as well as procure at least 85 percent of its
fruits and vegetable requirements from local farmers.”

OK was also requested to maintain or improve the existing employment contracts of Food
Lovers Market employees at least for two years and not be involved in the approval process
of franchising arrangements between Fruits and Vegetables City Holdings and other
retailers.

In the quarter under review, the commission also endorsed the acquisition of Charles
Stewart Day Old Chicks by Shanksville Farming. In August 2022, the commission received
notification of the acquisition of the entire issued share capital of Charles Stewart by
Shanksville.

Shanksville is a private investment holding entity incorporated in Zimbabwe and through
its subsidiaries, Brand Agro and Sable Park Estates, produces, packages and distributes
broiler chickens and chicken products, whereas Charles Stewart is a broiler and layer dayold chicks (DOC) producer.

ICTC said, “Given the analysis, the Commission noted likely effects of the merger on
effective competition in the relevant market. In light of that, the Commission approved
the transaction on the condition that: Charles Stewart its subsidiaries, affiliates and
successors in title shall continue to supply layer DOC to its customers on nondiscriminatory terms and conditions that include inter-alia prices, quality and delivery

terms and submit to the Commission annually, a compliance report with regards to sales.”
In 2022, the CTC approved a total of 32 mergers and acquisitions with most of them
coming in the second quarter.-The Herald