- Axia acquired an additional 24.5% taking cumulative holdings to 50.51%
- Move aimed at increasing shareholder value
Harare – Zimbabwe Stock Exchange (ZSE) listed retail and distribution company, Axia, has acquired a further 24.5% stake in its subsidiary motor parts and car service business Transerv, increasing its total shareholding in the entity from 26.01% to 50,51%.
The additional stake in Transerv was acquired for an amount of US$900 000 through Axia’s wholly owned, Mauritius based subsidiary – Excalibur Mauritius limited while goodwill was recognized at a total ZWL$15.63 million on the date of the transaction which has given the group the majority of shares and the controlling interest in the entity.
In a statement accompanying the group’s results for the financial year ended 30 June 2020, the board chairperson, Luke Ngwerume said the move was motivated by the need to increase investor value.
“This acquisition will enable Transerv to pursue strategies that maximise shareholder value with further alignment and support from the Axia group, which will enhance the long-term returns,” he said.
In 2018 Axia acquired a controlling stake in bedding company Restapedic Bedding in a horizontal acquisition move, as the company consolidated its huge profits into non-monetary assets.
Transerv owns a total of 24 trading outlets, 15 Fitment Centers, a diesel pump room (ADCO), Clutch and Brake Specialists (CBS), franchised from Midas and an Auto Cycle Center and was able to record a 274% increase in operating profit for the year ended 30 June 2020 in comparison with the prior year despite a 38% reduction in sales volumes due to the corona virus’ effects on business.
On top of the stake in Transerv, Axia also has a 66.67% stake in the home electronics and furniture retailer – TV Sales and Home and a further 50.01% in Distribution Group Africa (DGA) and recorded a revenue of ZWL$7.848 billion in inflation adjusted terms during the year, representing a 1% decline from ZWL$7.939 billion recorded in the previous year from all its operations.
In 2018, Axia deconsolidated Transerv and began equity accounting for its then 26.01% stake. The company said the change was to improve efficiency in reporting, monitoring and control and other administrative work in the distribution business and would be reversed once the group attains a 50% shareholding threshold.
Equity Axis News.