Capital markets regulator --
The deal entails the acquisition of the entire issued share capital of Dawn by hospitality group ASL but at a price that is lower than the prevailing market rate, raising concerns of potential prejudice on shareholders. SECZ is now stepping in to protect investors in line with section 4 of the Securities and Exchange Act.
"It is within that context that the Commission has noted with concern the transaction in terms of which the entire issued share capital of
"The commission is currently engaging the
The deal has been questioned by analysts at ZFN arguing interests of minorities have not been fully considered.
In a column, ZFN has shown the deal short-changes minority shareholders, a case also similar to that of
In a circular to shareholders ASL proposed it will issue one ASL ordinary share for every 3,988075946 Dawn ordinary shares, which translates to a ratio of 1:4. ASL shareholders are also advised that through the acquisition, the company's net asset value (NAV) per share will increase to
"It is thus evident that Dawn is many times bigger and more valuable than ASL which raises an interesting question about who should be buying who between the two businesses assuming an arm's length transaction.
"Any analyst worth her salt would conclude that while the rationale for the offer makes sense, the terms require further scrutiny and robust justifications by the promoters of the transaction," said ZFN.
As of
"Dawn minorities as the sellers in my view should insist on this swap ratio instead of what is being proposed," said ZFN.
In the early 2000s
Now the companies are reversing the unbundling. ZFN indicated while the ASL/ Dawn transaction was made by an unrelated party -- ASL, which has no shareholding in Dawn, both companies are controlled by same people.
As such, it would be imperative for those "with significant holdings in both entities to recuse themselves from voting and leave minorities to independently decide what's good for them."
A similar case is that of the ZHL/ ZPI which unbundled in post 2000 but now reversing it and the two consolidating with interests of minority shareholders not fully considered.
Minorities of ZPI have been asked to approve the transaction on valuations based at
Copyright The Herald. Distributed by AllAfrica Global Media (allAfrica.com)., source