FINANCIAL services giant, CBZ Holdings Limited (CBZHL) will hold an extraordinary general meeting (EGM) on January 31, 2022 to seek approval from its shareholders to acquire a stake of 31,22% in First Mutual Holdings Ltd (FMHL) shares held by National Social Security Authority (Nssa).
CBZHL currently holds 3,23% shareholding in FMHL through a special purpose vehicle held under PIM Nominees (Pvt) Limited and the acquisition of the additional shares from NSSA constituting 31,22% of the issued ordinary shares of FMHL will take CBZ Holdings Limited’s total shareholding to approximately 34,45%.
In a circular to shareholders, CBZ said the board approved the company’s formal bid for the acquisition of the 31,22% equity stake in FMHL held by Nssa.
“Realising the potential synergistic opportunities between CBZHL and FMHL, the board approved the company’s formal bid for the acquisition of the 31,22% equity stake in FMHL held by Nssa. In June 2021, the company emerged as the highest bidder and was, therefore, granted the opportunity to enter into an agreement with Nssa for the acquisition of their 31,22% equity stake in FMHL,”
Rumbidzayi Angeline Jakanani, group legal corporate secretary, said in a statement.
She said the total purchase consideration for this transaction was agreed at $6 355 922 132, a price of $28 per FMHL ordinary shares excluding transaction costs.
CBZ is looking to acquire
226 997 219 million FMHL shares
Jakanani said the proposed settlement wherein 70% of the transaction consideration shall be settled by way of a share swap involving the issuance and allotment of new CBZHL ordinary shares will result in a dilution of 8,23% to the current shareholders of CBZHL.
The remaining 30% will be settled by cash payment.
“30% of the total consideration i.e, $1 906 776 640 to be settled in cash, comprises $1 815 353 056 being the net cash proceeds due to Nssa after trading transaction costs of
$91 423 584. The net cash proceeds due to Nssa of $1 815 353 056 translates to US$21 197 440 after being converted at the agreed exchange rate of $85,6402/US$,” Jangani revealed.
“70% of the total consideration i.e, $4 449 145 492,40 to be settled through the issuance of 46 833 110 new CBZHL ordinary shares on the basis of 28 CBZHL ordinary share for every 95 FMHL ordinary shares i.e, 1 CBZHL ordinary share for every 3 393 FMHL ordinary shares held by Nssa.”
The proposed acquisition of FMHL ordinary shares held by NSSA is a related party transaction for the purposes of the Zimbabwe Stock Exchange Listings Requirements because Nssa is a significant shareholder (holding 10% or more of the voting rights) in CBZHL (with an equity stake of 18.17%).
Consequently, Nssa will be precluded from voting at the EGM on the resolution regarding the proposed transaction.
She said through the exploitation of synergies between these two, businesses should unlock more value in CBZHL, looking to enhance its own insurance and property businesses further and widen its product offering to its significant client base.
Jakanani added that going forward, CBZHL intends to consolidate its position in FMHL by acquiring a control block in FMHL (i.e., 35% as defined in section 234 of the Companies and Other Business Entities Act (Chapter 24:31) (COBE) as read with Note 2 of the Twenty-Ninth Schedule of the ZSE Listings Requirements).
“The proposed transaction is, therefore, part of CBZHL’s diversification and consolidation strategy,” she said.