Regulatory authorities have approved Starafrica corporation’s bid to buy out Red Star Holdings minorities, paving way for the country’s second largest wholesale and retail chain to de-list from the Zimbabwe Stock Exchange (ZSE) in two days.
Starafrica corporation, which listed Red Star separately four years ago, controls 66,31% of the ailing wholesale and retail division and has offered to pay minorities in cash or by way of its own shares.
The minority buyout was prompted more by Red Star’s failure to raise $10 million required to recapitalise the business than by its controlling shareholder’s desire to consolidate its shareholding.
The deal has been found to be the optimal way to address the company’s negative shareholder equity. The recapitalisation crisis has also seen the firm pulling out of Zambia.
Red Star CEO Denford Mberi was not prepared to comment on the proposed deal on Tuesday.
But market players on Tuesday confirmed the de-listing would take place on Friday, reducing ZSE’s members to 76.
The de-listing will reduce Red Star into a wholly-owned private subsidiary of Starafrica corporation all over again.
Red Star’s minorities included Barclays Zimbabwe Nominees, which has three accounts holding 4,37%, 3,99% and 2,76%, the National Social Security Authority with a 1,97% stake and Old Mutual Life Assurance, which owns 1,79% of Red Star.
The company trades in dry groceries, household products, hardware, liquor, health and beauty products, cigarettes, beverages, stationery, building materials and electrical products.
Since listing on the ZSE in 2006, Red Star has added R Chitrin to its portfolio, an acquisition that has expanded its wholesale and retail chain, which comprises Advance Wholesalers and Red Star Wholesalers, the second largest wholesale in the country.