NWK Holdings Limited from Lichtenburg and Senwesbel Limited from Klerksdorp, both in North West, said they decided to work together to form a producer holding company to serve as a platform for consolidation and growth of agricultural enterprises.
“The transaction is structured in such a manner that the shareholders of Senwesbel will acquire a 59% interest and the shareholders of NWK Holdings Limited will acquire a 41% interest in the joint venture. The ‘new’ holding company will be the majority shareholder in NWK and Senwes, which will autonomously continue with their business activities,” according to a joint statement recent released.
The SA agriculture sector is “inevitably moving towards consolidation”. International competitors are moving their businesses to Africa and SA investors are actively seeking investments in the Southern African agriculture sector, continued the statement.
The boards of directors of the two companies “are of the opinion that a more competitive, diversified agricultural investment company, controlled by producers, will be able to successfully respond to these changing market conditions.”
NWK chairperson Heinrich Kruger said that, in a cyclical agricultural production environment with many challenges, high input costs and low margins, the shareholders of the companies could use the merger to increase share investments, thereby utilising future value unlocking opportunities.
“The transaction was structured in such a manner that the operating companies of both Senwes and NWK will continue. The trademarks, infrastructure and client-base of each operating company, will be preserved, thereby ensuring that the day-to-day-contact with both companies will not change,” said Dries Kruger, chairperson of Senwesbel Limited.
The proposed merger is subject to approval by shareholders and regulatory authorities.