National Foods Offers Strategic Share Buyback Ahea...

National Foods Offers Strategic Share Buyback Ahead of Delisting

Audrey Galawu

Assistant Editor

National Foods Holdings Limited, Zimbabwe’s leading food manufacturer, has announced plans to delist from the Victoria Falls Stock Exchange.

Central to this transition is a strategic share buyback offer designed to provide shareholders with an exit option before the company transitions to private ownership.

Under the proposed buyback, National Foods is offering its shareholders US$1.71 per share. This offer covers up to 13,647,198 ordinary shares—representing 20% of the company’s issued ordinary shares. Shareholders opting to sell will receive the offer consideration seven business days after transferring their shares to National Foods.

The buyback period is set to open on December 20, 2024, and will close on January 17, 2025.

For those shareholders who choose not to sell, National Foods has committed to future buybacks, ensuring ongoing opportunities to divest even after the delisting.

“The buyback provides shareholders with a chance to sell their shares at a price reflecting their intrinsic value, especially in light of the low liquidity on the VFEX. The structured nature of the buyback offers a streamlined and transparent mechanism for exiting investments, eliminating the complexities associated with the thinly traded VFEX.

“Shareholders can reallocate the proceeds to other investments with higher liquidity or better growth potential,” reads the notice.

The buyback is exempt from capital gains tax, enhancing its financial appeal.

The low trading activity on the VFEX has limited shareholders’ ability to fully realize or exit their investments. Over the past year, less than 1% of the company’s total shares were traded. The buyback addresses this challenge by offering liquidity and ensuring shareholders can maximize their returns.

Moreover, the company has highlighted the inefficiency of maintaining a public listing under current conditions, citing significant regulatory and compliance costs. These savings, post-delistment, will be redirected to strategic growth initiatives, further strengthening National Foods’ position in the market.

“Shareholders who remain after the buyback and delisting will benefit from National Foods’ commitment to consistent dividends, high standards of corporate governance, and long-term value creation. However, the decision to sell or hold remains a strategic choice for investors, influenced by their financial goals and investment horizons.”

The extraordinary general meeting to vote on the buyback and delisting is scheduled for December 18, 2024, with the results to be published on December 19.