CBZ Holdings bid to expand FMHL stake rejected by competition commission

The Competition and Tariff Commission (CTC) has delivered a major blow to CBZ Holdings Limited’s (CBZHL) growth strategy, denying its request to acquire more shares in First Mutual Holdings Limited (FMHL) and maintain its initial approved shareholding of 31.22%.

This decision comes after CBZHL issued a notice to FMHL shareholders on October 31, 2024, regarding the Mandatory Offer in accordance with the Zimbabwe Stock Exchange Listings Requirements SI 134 of 2019 and the Companies and Other Business Entities Act (Chapter 24:31).

However, the CTC’s final decision on November 29, 2024, has effectively put a halt to CBZHL’s plans to expand its stake in FMHL.

As a result of the CTC’s decision, CBZHL will no longer be proceeding with the Mandatory Offer to minority shareholders in FMHL.

“Further to the Notice to Shareholders of First Mutual Holdings Limited (‘FMHL’) issued by CBZ Holdings Limited (‘CBZHL’) on 31 October 2024 relating to the Mandatory Offer in accordance with the Zimbabwe Stock Exchange Listings Requirements SI 134 of 2019 and the Companies and Other Business Entities Act (Chapter 24:31).

“Shareholders are advised that the Competition and Tariff Commission (‘CTC’) made its final decision on 29 November 2024 on CBZHL’s application for the approval of the acquisition of additional shareholding in FMHL through a Mandatory Offer.

“The CTC has resolved that CBZHL must maintain 31.22% shareholding in FMHL which was initially approved by the Commission,” Rumbidzayi Jakanani CBZHL group chief governance officer told shareholders in a notice on Monday.

“In light of the decision by the CTC, Shareholders of FMHL are hereby advised that CBZHL will no longer be proceeding with the Mandatory Offer to the Minority Shareholders in First Mutual Holdings Limited. No further announcements will be made in respect of this issue.”

Recently, in a related development, ZB Financial Holdings announced that its merger negotiations with CBZ Holdings are progressing, with the shareholder concerned having made an application for regulatory approval.

The merger process is at an advanced stage, and regulatory approval is yet to be obtained for the transaction.

If concluded successfully, the transaction may have a material effect on the company’s securities price.

The proposed merger between CBZ Holdings and ZB Financial Holdings is expected to create a dominant player in Zimbabwe’s financial and capital markets.

The merged entity is expected to be the largest financial institution, the most aggressive by assets in terms of net present value, and the largest by market capitalisation.

CBZ Holdings has already secured exchange control approval for the transaction, and there have been no hurdles in securing the nod from the Zimbabwe Stock Exchange, where both institutions are listed.

The target is to consummate the merger transactions for CBZ, ZB Holdings, and FMHL by the end of the year.