By Stanley James, Business Editor
The US$377 million purchase of Arcadia Lithium project by a Chinese firm tops the list of approved company acquisitions in Zimbabwe in the first six months of the year confirming investors’ interest in the Lithium value chain.
Presenting a review of approved mergers since January, Competition and Tariff Commission Spokesperson, Mr Tatenda Zengeni revealed the purchase of the project by a Chinese firm, Huayou had emerged as the biggest approved transaction of the latest nine company acquisitions.
While there were other approved mergers in different sectors, it is the value to be derived from the lithium project that also excited the authority in authorising the transaction.
“Transactions of such nature though difficult we had to assess the implications in terms of its entire value of more than US$400 million, remember it was between Huayou and Australia-listed Prospect Resources. So, we had to assess all the relevant aspects including a due diligence exercise the ascertain whether the transaction had value or not after all had been done. Indeed, we found it appropriate to ratify or approve it subject to certain conditions that the firm will set a battery manufacturing plant in Zimbabwe,” Zengeni said.
However, since January there were some transactions that were also not approved.
“Basically, they are two proposals that the commission turned down based on the fact that they could not fit into the basic principles of fair trading, protecting the interest of the consumers, avoiding monopolies among other key features. Actually, we had to even impose some penalties to the related parties for their failure in complying with set prescribed rules necessary for firms to merge their operations.”
Findings by the commission revealed that acquisitions were mainly based on the need by firms to boost operations, increase market share, survival and allow fresh capital injection.
In a related development, two financial listed firms are exploring the possibilities of merging their operations.
ZB Holdings and CBZ Holdings have already issued cautionary statements to the market, confirming ongoing talks on the proposed merger.
The two banking entities have advised their shareholders to exercise caution when dealing with shares.
Market watchers say they are waiting to see how the proposed merger will be formulated subject to regulatory approvals including the respective investors.