• CTC says exchange traded acquisitions remain subject to merger approval where they result in control
• Dairibord’s proposed control sale has prompted the regulator to remind investors that buying shares through the stock exchange does not exempt transactions from competition law
• The guidance raises the regulatory, financial and execution risks facing strategic investors pursuing listed companies

Harare - The Competition and Tariff Commission has warned investors, listed companies, stockbrokers and corporate advisers that acquisitions through the Zimbabwe Stock Exchange and Victoria Falls Stock Exchange remain subject to Zimbabwe’s merger control rules where they result in a change of control and meet prescribed financial thresholds.

The clarification follows the disclosure by Dairibord Holdings that shareholders controlling more than 51% of the company are negotiating the sale of their stake, a transaction that could become one of Zimbabwe’s most significant corporate acquisitions if completed.

While the Commission did not identify the prospective buyer, the timing of its intervention signals that regulators are already preparing for the competition implications of a deal capable of reshaping Zimbabwe’s fast moving consumer goods industry.

The Commission’s notice is not simply a legal reminder. It recognises that ownership of strategic companies carries consequences extending beyond the transfer of shares. A controlling shareholder gains the ability to appoint directors, determine capital allocation, influence pricing strategy, approve acquisitions and redirect the long term strategy of the business. Competition authorities therefore assess who ultimately controls productive assets instead of focusing solely on how the shares were acquired.

That principle is particularly relevant in Dairibord’s case. Three shareholders, Mega Market Investments, Equivest and Mutare Mart and Exchange, now control more than 51% of the company and have confirmed negotiations to dispose of that controlling block. Mega Market, led by Mutare businessman Shiraan Ahmed, has steadily increased its holding after first acquiring approximately 10% in 2018 and now owns more than 27% of the dairy processor. Their combined shareholding effectively determines who controls one of Zimbabwe’s largest food manufacturers.

Although the identity of the buyer remains undisclosed, market speculation has centred on Varun Beverages. Should that prove accurate, the transaction would represent far more than another corporate acquisition. It would accelerate Varun’s transformation from a soft drinks bottler into one of Southern Africa’s most diversified consumer goods businesses.

The acquisition would also come at an important point in Varun’s Zimbabwe business. Varun’s Zimbabwe revenue declined 5.2% to US$184.5 million in the year ended 31 December 2025, while operating margins narrowed from 13.5% to 8.0%. Over the nearest comparable period, Delta reported approximately 15% growth in sparkling beverage volumes, highlighting stronger competitive momentum in Zimbabwe’s carbonated drinks market.

Acquiring Dairibord would remove years of organic expansion. Instead of building milk collection systems, processing facilities, distribution infrastructure and consumer brands from the ground up, Varun would immediately acquire established brands including Steri Milk, Chimombe, Pfuko Maheu, Cascade and Lyons. It would also inherit one of Zimbabwe’s largest dairy processing businesses, an extensive cold chain distribution network and a business purchasing roughly a third of the country’s formal milk production.

That combination would fundamentally alter Varun’s product portfolio. The company would operate across carbonated beverages, bottled water, fruit juices, dairy products, yoghurt, maheu, snacks and potentially beer should Carlsberg production materialise. Such breadth would place it in direct competition with Delta across beverages while simultaneously expanding competitive pressure on Innscor’s consumer food operations.

The strategic rationale becomes stronger when viewed through Varun’s recent financial performance. Zimbabwe has become one of Varun’s fastest growing African markets, with revenue expanding from approximately US$200,000 in 2015 to almost US$200 million. That rapid growth is beginning to moderate. Revenue declined by about 5.2% during the latest financial year while operating margins narrowed from 13.5% to 8%. During the same period, Delta continued expanding sparkling beverage volumes by approximately 15%.

Those figures illustrate the limits of relying predominantly on carbonated beverages. Dairibord would immediately diversify Varun into faster growing food and dairy categories while reducing dependence on soft drink volumes. If beer production under the Carlsberg agreement follows, Varun would compete across virtually every major beverage segment in Zimbabwe.

Dairibord also enters the negotiations from a position of improving operating performance. Revenue increased 8% to US$137.4 million during 2025 as sales volumes rose 12%. The company invested US$11.8 million in additional production capacity and first quarter 2026 volumes climbed another 26%, driven by stronger demand for Steri Milk, yoghurt and beverage products.

Rising production costs and utilities continue weighing on profitability, although those challenges could become easier to manage within a larger regional group capable of leveraging procurement scale, technology and capital investment.

The proposed transaction also reflects a broader transformation occurring within Zimbabwe’s dairy industry. Dairibord previously explored combining operations with Dendairy before negotiations failed.

Dendairy has subsequently been acquired by ETG Parrogate, owner of the ZimGold portfolio. If Dairibord also joins an international consumer goods group, Zimbabwe’s two largest dairy processors would both become part of multinational businesses, accelerating an industry consolidation that domestic operators struggled to achieve independently.

This explains why the Competition and Tariff Commission has intervened before the transaction concludes. Competition law is designed to examine whether acquisitions strengthen competition through investment and efficiency or reduce it through excessive market concentration. Should Varun emerge as the successful buyer, regulators will need to evaluate overlaps across beverages, dairy, distribution networks, procurement arrangements and future expansion into adjacent consumer categories.

The Commission has also clarified an equally important principle for investors generally. Control is not determined exclusively by majority ownership. Minority shareholdings may also require merger notification where they confer decisive influence through shareholder agreements, board appointments or fragmented ownership structures. Investors gradually accumulating strategic positions through exchange trades therefore remain subject to merger assessment once effective control emerges.

That clarification raises the execution standards for mergers involving listed companies. Strategic investors must now incorporate competition analysis alongside valuation, financing, due diligence and securities regulation before acquiring influential positions. Failure to notify qualifying transactions exposes parties to penalties, possible reversal of completed acquisitions and significant execution risk.

For Zimbabwe’s capital markets, the Dairibord transaction may prove to be the beginning of a broader cycle of corporate consolidation. Depressed market valuations, stronger regional investors and growing demand for established brands continue increasing the attractiveness of listed companies as acquisition targets. The Commission’s intervention demonstrates that regulatory oversight is evolving alongside that trend.

Whether or not Varun ultimately acquires Dairibord, the Commission has delivered a clear message. Strategic ownership of listed companies will no longer be viewed solely through the lens of stock market transactions. Once an acquisition has the potential to reshape competition within an industry, merger control becomes central to the deal.

Dairibord may therefore become the transaction that defines a new phase in Zimbabwe’s mergers and acquisitions market, where the value of corporate control is matched by equally rigorous regulatory scrutiny.

Equity Axis News