Zimbabwean businessman’s bid to take over Tongaat Hulett scuttled


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The R2-billion takeover of sugar giant Tongaat Hulett by the controversial Rudland family of Zimbabwe has potentially crashed and burned.

A key shareholder resolution paving the way for the deal was declared a “nullity” yesterday by the Takeover Regulation Panel (TRP), a unit of the Department of Trade, Industry and Competition.

This followed an investigation into suspicious share purchases by a business partner of tobacco baron Simon Rudland right before a shareholder vote on the deal.

The TRP investigation set out to determine whether this associate, Ebrahim Adamjee and his family are “inter-related parties” with Magister Investments, the Mauritius-based company making the bid for Tongaat.

The conclusion reached by investigator Zano Nduli is an unequivocal “yes” which means the share purchases must be presumed to represent Magister and the Adamjees acting in concert to sway the vote.

The reasoning is that Adamjee is Simon Rudland’s partner in the controversial Gold Leaf Tobacco Corporation. Simon is in turn the brother of Hamish Rudland who is the face of Magister.

Confronted with this apparently straightforward relationship Adamjee only provided a “bald denial” that he had a genuinely significant business relationship with Rudland. The tobacco tycoon is supposedly only “a non-resident non-executive director and is not involved in the business operations”, according to a sworn statement by Adamjee.

When Nduli requested supporting documents such as a share register for Gold Leaf, Adamjee and Rudland “chose to stonewall instead of [practice] candidness”, according to his report.

“When considering the facts of this matter, I was reminded of a Zulu idiom of ‘ukucasha ngesithupha’ – literally meaning hiding behind one’s thumb – which describes a situation where a person clumsily obfuscates in an attempt to shirk responsibility.”

The voided resolution was a waiver of the normal requirement that anyone buying more than 35% of a public company must offer to buy out all other shareholders. It was cited as a major precondition for the deal when the transaction was set out in a circular to Tongaat shareholders in December.

It was approved at a shareholder meeting in January with the support of major institutional shareholders such as the Public Investment Corporation (PIC) and Stellenbosch-based PSG Asset Management.

The TRP had initially assented to this waiver before an appeal by minority shareholders led to the investigation, which has now potentially sunk the deal.

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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