Dubai tycoon targets Zimbabwe

DUBAI billionaire, Ali Albwardy, is planning a hostile takeover of Zimbabwe Stock Exchange (ZSE)-listed conglomerate, Meikles Limited, through one of his investment vehicles involved in the hospitality, food and trade business.

Meikles, also listed on the London bourse, confirmed in a cautionary statement that it had received a bid from Albwardy Investment, a Dubai-based entity, for the entire shareholding in the company.

Albwardy Investment was founded by Albwardy in 1976.

He is the chairman of the enterprise, which has subsidiaries involved in hospitality, food, trade, industry, insurance, logistics, industrial engineering and construction, entertainment services, fast moving consumer goods distribution, and lifestyle, among others.

Meikles, a conglomerate with interests in the retail business through the TM-Pick'n Pay supermarket chain and a few departmental stores, also runs hotel businesses, among them Zimbabwe's five star hotel, Meikles, and a tea-manufacturing entity, Tanganda Tea Company.

It therefore, appears to fit perfectly into Albwardy's strategy for Albwardy Investment, which he chairs.

Albwardy also serves as chairman and director of Pacman LLC, and owns the Dubai Polo Country Club, which hosts the Cartier International Polo Challenge every year.

Initially, the investor had targeted Meikles' minority shareholders, but the discussions have now taken a new twist, with the investor now interested in the entire shareholding of Meikles.

"The offer now under consideration has been made to all shareholders by Albwardy Investment, an entity based in Dubai. The proposed transaction can, however, not be formalised until the audited financials for the year ended March 31, 2017 are made public. The company is expediting this process and it is anticipated that the 2017 financials will be made available during the first half of May 2017," Meikles' company secretary, Thabani Mpofu, said in a cautionary statement.

Major shareholders in Meikles include Gondor Capital Investment, Old Mutual Assurance and Clayway Investments.

The foray into Zimbabwe represents a major expansion on the continent by Albwardy, who already owns three hotels in Tanzania.

These are the Kilimanjaro Hotel in Dar-es-Salaam, a beach hotel in Zanzibar and a lodge in the Serengeti national park.

It was not immediately clear if Meikles' majority shareholders would capitulate to Albwardy's offer, which is likely to court a premium on the prevailing share price on the stock exchange.

Meikles is controlled by the Meikles family and any disposal may be seen as a betrayal of the group's heritage.

The disclosure by Meikles of Albwardy's offer clearly indicates that preliminary talks with the family may have been held, and the desire for any talks to start once financials for the full-year to March 31, 2017 have been released suggests that members of the Meikles dynasty want to get the best deal possible from the transaction.

The expectation, therefore, is that Albwardy's group would formally propose buying the Meikles shares from every shareholder once the financial results are out, tabling its price for the shares.

There is no doubt that the Dubai firm would offer a higher price per share than the company's prevailing stock price. This would give minorities as well as the major shareholders an incentive to sell.

In its initial cautionary to shareholders, Meikles had indicated that it would exit the bourse once talks to buy-out minorities have been successful. At the time, the company did not disclose the interest of the Dubai Sheik in its business.

This was seen by market analysts as an obvious path for the group, particularly after it had fallen out with the ZSE's executives after they had temporarily suspended the company from trading on allegations of overstating a debt owed by the Reserve Bank of Zimbabwe (RBZ).

The ZSE chief executive officer, Alban Chirume, has suggested that Meikles may possibly have intended to manipulate its share price.

The debt, which amounted to US$90 million, was accrued in 1998 from transactions related to the group's dual listing on the ZSE and the London Stock Exchange.

The group said it hoped to get its money from the central bank to fund its expansion programmes and comply with the indigenisation law.

But the ZSE took punitive action against the company, alleging that the Securities and Exchange Commission had received written submissions from the RBZ on the asset's carrying value and availed this to the bourse, which believed that the information was "material and price-sensitive".

Meikles reacted angrily to the suspension and threatened to pull out from the bourse. It filed a lawsuit against both the ZSE and Chirume, who was recently sent on suspension, in his personal capacity, claiming damages to the tune of US$50 million.

The matter spilled into Parliament ahead of the adoption of the RBZ Debt Assumption Bill, where it was indicated that the Meikles debt stood at US$47 million at the end of 2013.

Three weeks ago, Meikles reported in its financial results for the year to March 31, 2016 that the amount stood at US$42 million as of September 30, 2016 but indicated that it continued to accrue interest.

Meikles started operating in Zimbabwe, then Rhodesia, in 1892, owned by three brothers, John, Stewart and Thomas Meikles, who had migrated from Scotland to South Africa, before venturing into business north of the Limpopo River.

Over the years, the company has grown into a conglomerate, which listed on the ZSE in 1996.

The company owns Meikles Hotel, Cape Grace Hotel in Cape Town, South Africa and the Victoria Falls Hotel in the resort town of Victoria Falls in a joint venture arrangement with African Sun Limited.

Meikles also owns a mining unit called Meikles Centar Mining.