Chibuku Products Limited to be sold

Post was last updated: December 19, 2017

The Comesa Competition Commission has confirmed receiving a notification on the proposed acquisition of Chibuku Products Limited by Delta Corporation Limited, a Zimbabwean public company listed on the Zimbabwe Stock Exchange.

A merger inquiry notice number 26 of 2017 posted on the commission’s website indicates that the two parties involved in the transaction, Delta Corporation Limited and Malawi Traditional Beverages Limited, have submitted that the transaction involves the acquisition of control by Delta of Malawi Traditional Beverages Limited, a private company incorporated under the laws of Malawi.

The notice says Malawi Beverages has no other activities other than holding shares in Chibuku Products.

Head of Mergers and Acquisitions at the Comesa Competition Commission, Willard Mwemba, said the case is still at preliminary stages of assessment.

“Currently, we are working with our counterparts at the Competition and Fair Trading Commission in Malawi (CFTC), the Competition and Tariff Commission of Zimbabwe and the Competition and Consumer Protection Commission of Zambia to determine the likely effects of the transaction in the market,” Mwemba said.

The merger was notified to the Comesa Competition Commission because it met the regional dimension requirements in that the parties involved have operations in more than one Comesa member country; Malawi, Zambia and Zimbabwe.

CFTC Director of Consumer Welfare and Education, Lewis Kulisewa, collaborated this when he was contacted to indicate whether CFTC had received a notification of the proposed acquisition.

“The merger application will be processed at the Comesa Competition Commission as it involves several Comesa member states,” he said.

This transaction is coming 14 months after CFTC approved the acquisition of 100 percent shareholding in SABMiller by AB Inbev, the world’s largest brewer.

At the time of the acquisition, SABMiller was operating through Malawi Beverages Limited, Malawi Traditional Breweries Limited and Chibuku Products Limited.

It is not immediately clear whether staff under Chibuku Products will be assured of keeping their jobs in the event that the acquisition is approved by the Comesa Competition Commission.

Mwemba only said the commission will consider this matter [jobs issue] under public interest in its analysis of the effects of the merger.

“The commission has not yet finalised the assessment but the public shall be informed of our assessment once the transaction is considered by our Board,” he said.

Some acquisitions approved in the past have led to massive job losses prompting labour unions to call for stiffer conditions on acquiring firms to protect workers.

But, in an earlier interview, Comesa Competition Commission Executive Director, George Lipimile, said the commission cannot just reject mergers for fear of possible job losses because that would be using competition law as a tool to frustrate companies.

Lipimile said mergers are now being used to increase corporate growth in the marketplace with the Comesa region managing to make an investment of $3.8 trillion from mergers and acquisitions approved in the region in 2015 alone.

The Comesa Competition Commission was established in 2004 to promote inter-regional trade among Comesa member countries.

One way the commission does this is by promoting fair competition and penalising uncompetitive trade practices in the Comesa region.

It has its headquarters in the Capital City, Lilongwe.

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