Delta explains regional expansion drive

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Enacy Mapakame
Zimbabwe’s largest beverages manufacturer Delta Corporation, said yesterday it will bid for assets in the region that its parent company AB InBev may divest from.

This comes as AB InBev indicated it was divesting from certain African markets especially the traditional beer sector, which Delta has been competent over the years.

Already, AB InBev has divested from Zambia and Malawi traditional beer businesses.

Delta acquired a stake in National Breweries of Zambia.

“The Delta board has resolved to bid for any such assets as they become available. The Delta board is excited about opportunities for growth as market leader in the traditional beer sector in the region,” said Delta in a statement.

This comes as social media went into a frenzy over Delta’s regional investments alleging these were tantamount to asset stripping.

Delta has since refuted such claims adding the current challenges the beverages firm is facing are a result of foreign currency shortages that have affected local industry in Zimbabwe.

The circulating social media reports have, however, insinuated the regional investments were prejudicing Zimbabwe in favour of AB InBev, through syphoning of funds out of the country.

“These investment transactions to date, have had no direct impact on the operating cash, particularly the foreign currency required for the Zimbabwe operations. The company had net cash of $302 million as at September 30, 2018. The disruptions to operations arise from the limited access to foreign currency. These investments will yield dividends and royalties for Delta into the future,” said Delta.

AB InBev owns a 40 percent stake in Delta.

In light of prevailing foreign currency challenges Zimbabwe is facing, AB InBev has supported Delta through line of credit for the importation of raw materials.

“In addition, AB InBev has agreed to place over $120 million, due to them in relation to unremitted dividends and fees, into RBZ savings bonds in order to reduce the pressure on the demand of foreign currency,” said Delta.

In 2017, Delta acquired a 70 percent stake in Natbrew Plc — Zambia from Heinrich’s Syndicate Limited which is a wholly-owned subsidiary of AB InBev in a transaction that included the acquisition of the Chibuku brand.

Last December, Delta also announced it had entered into binding agreements to acquire United National Breweries Pty Ltd of South Africa whose funding is yet to be finalised.

“It is in the public domain that in certain African markets, AB InBev is divesting from the traditional beer sector, a market segment in which Delta has proven competencies,” said Delta adding such moves from parent company were providing expansion opportunities for Delta.

 

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