By Taurai Mangudhla
A MULTI-MILLION-DOLLAR historic merger between the country’s largest and second largest milk processor by market share Dairibord Holdings Limited, and Kweke-based Dendairy has crumbled, one of the parties confirmed the development in a statement yesterday.
The merger would have created a strong monopoly in the industry while creating a regional milk processing powerhouse in the country.
Dairiboard, which is listed on the Zimbabwe Stock Exchange, yesterday urged shareholders to disregard the Dendairy deal.
“Dairibord Holdings Limited and Dendairy (Private) Limited have been exploring opportunities for creating sustainable shareholder value for mutual benefit.
“Shareholders are referred to the cautionary announcement first published on July 1, 2020 and are advised that the conclusion of the discussions indicates that it is in the interest of both parties to discontinue the process and remain as separate entities,” Dairibord said.
“The contents of the cautionary have ceased to have any effect on the company. Accordingly, caution is no longer required to be exercised when dealing in the company’s shares. The parties express best wishes and success for the future,” the statement read.
The proposed merger and acquisition, was largely seen by analysts and experts as an attempt by Dairibord to leverage on Dendairy’s strategic investments into production of dairy products and its access to the regional market.
This came after reports that Dendairy in 2018 started a project to expand operations at its Kwekwe plant, which would have seen the firm almost doubling capacity from 4,6 million litres per month to eight million litres through the addition of three new production lines.
The planned expansion was delayed by funding constraints and the COVID-19 pandemic.
As such, the deal was seen to have the potential to improve raw milk production for Dairibord while also boosting its foreign currency earnings and local market share in the dairy sector.
The collapse of the largest merger in the history of Zimbabwe’s dairy industry comes after raw milk intake last year declined by 6%, largely caused by lower milk yields at farms due to rising costs of stockfeed.
Dairibord earlier revealed that sales volumes were up 49% for the first five months of 2021 to May. However milk sales remained constrained by raw milk supply which fell 2% during the period in question.
As of May, Dairibord accounted for 39,1% of national raw milk intake.