- The Competition and Tariff Commission has ruled against CBZ Holdings' proposed acquisition of additional shares in First Mutual Holdings
- CBZ recently increased its stake in FML to over 36% after purchasing 31.2% from NSSA
- NSSA, the largest shareholder in CBZ with a 23.32% stake, sold part of its 66% stake in FML to CBZ to comply with regulatory limits
Harare-The Competition and Tariff Commission (CTC) has issued a ruling against CBZ Holdings' proposed acquisition of additional shares in First Mutual Holdings (FML).
This decision follows CBZ's purchase of a 31.2% stake in FML from the National Social Security Authority (NSSA) in 2023, which increased its total stake to over 36%.
As a result of this acquisition, CBZ was required to make a mandatory offer to FML's remaining shareholders, as stipulated by the Zimbabwe Stock Exchange (ZSE) rules.
However, this requirement is now nullified, according to a notice issued by CBZ.
CBZ is Zimbabwe’s largest bank and FML is one of the country’s largest insurers and a holder of an expansive property portfolio.
NSSA is the largest shareholder in CBZ, Zimbabwe's largest bank, with a substantial 23.32% stake.
‘’The CTC has resolved that CBZHL must maintain 31.22% shareholding in FMHL which was initially approved by the Commission’’, the Chief Governance Officer Rumbidzayi Angeline Jakanani said.
Prior to this ruling, the CTC had indicated that it would make a final decision on CBZHL's acquisition application by the end of November 2024.
In response, the ZSE had granted CBZHL an extension until November 30, 2024, to fulfill its obligation to make a mandatory offer to FMHL's remaining shareholders.
The CTC's investigation stemmed from a prior agreement in which CBZHL was required to notify the commission of any intention to increase its stake in FMHL.
Under the deal, NSSA sold part of its 66% stake in FML to CBZ in exchange for cash and 9% of CBZ stock. NSSA sold the shares because the size of its previous shareholding, which NSSA held since 2012, violated the regulations of both the stock exchange and those of insurance regulator IPEC.
The transaction left NSSA as the largest shareholder in both CBZ and FML.
The commission's role is to assess whether such transactions could significantly reduce competition in the market or create a monopoly.
CBZHL's strategy to merge with FMHL was part of a broader vision to establish a pan-African bank.
The bank viewed this merger as a critical step towards enhancing shareholder value and expanding its regional presence, leveraging its strong share price as a currency for future transactions.
The management believed that combining resources and talents will not only benefit existing shareholders but also contribute to the development of Zimbabwe's financial sector, positioning the country as a regional financial hub.
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