Tiger Brands Ltd, South Africa’s largest food company, increased its stake in Zimbabwe’s National Foods Holdings Limited as the company expands into other countries on the continent.
Tiger Brands raised its holding in Zimbabwe’s biggest corn miller and cooking oil company to 37%, buying about 11% of National Foods Innscor Africa Ltd.
This lowered Innscor’s stake to 37%, according to an emailed response to questions from Johannesburg-based Tiger Brands on Tuesday.
Innscor sold an 11,7% stake for $1,46 per share, or $11,7 million, for an 11,7% stake, Dzika Danha, director of Harare-based IH Group, a research company, said in an interview, without saying how he knew.
That is 76% more than National Foods’ last traded price on the Zimbabwe Stock Exchange. Innscor runs fast-food outlets and spun off a crocodile farming unit last year.
“This transaction is favourable for Innscor and the company may quicken its capital expenditure drive by increasing its retail space,” he said. “It is an example of increased confidence in the Zimbabwean economy.”
Zimbabwe’s economy exited a 10-year recession in 2009.
Danha has a “buy” recommendation on both Innscor and National Foods. He initiated coverage of National Foods on Monday.
The Zimbabwean miller has the capacity to mill 600 000 metric tonnes of corn annually, 264 000 tonnes of wheat flour and to process 480 000 tonnes of stockfeeds, according to IH Securities.
Annual revenue was $201 million in the last fiscal year.
Tiger Brands rose 0,7% to 228 rand in Johannesburg on Tuesday, giving the company a market value of R43 billion ($5,4 billion).
Innscor on Tuesday traded unchanged at 54 cents, giving it a market capitalisation of $285 million while National Foods has a market value of $54 million. —Bloomberg