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03 Sep 2007 11:09
Zimbabwe’s government has taken over United States food giant HJ Heinz’s 49% stake in the African nation’s leading cooking oil maker for $6,8-million and handed its management to a firm with ties to the state.
Agro-processing company Cotton Company of Zimbabwe (Cottco), which was a state enterprise until its privatisation in 1997, announced it had bought HJ Heinz’s stake in Olivine Industries in a deal facilitated by a government-owned investment company.
The transaction is the first major deal involving the takeover of a firm following President Robert Mugabe’s vow to give Zimbabweans greater control over foreign-owned assets. Mugabe’s government has accused some businesses of halting production in a plot to undermine the inflation-ravaged economy.
Zimbabwe’s Parliament is considering enacting a law that seeks to transfer majority ownership of businesses—including foreign-owned banks and mines—to locals.
HJ Heinz, which makes Ore-Ida potatoes and Smart Ones frozen meals in addition to Heinz ketchup, was one of the first foreign investors in Zimbabwe after the country’s independence from Britain in 1980.
The Harare government retains influence in Cottco through the state-run National Social Security Authority, which is the largest single shareholder in the company.
Zimbabwe’s government owns 51% in Olivine Industries, in a partnership forged in 1982 that saw HJ Heinz given a contract to manage the business.
The Southern African country is currently going through a severe economic crisis, with inflation above 7 600% and severe foreign currency, electricity, fuel and food shortages.
A price freeze ordered by Mugabe in June has worsened food shortages after frenzied buying left most shop shelves emptied of basic consumer goods, including cooking oil.
Mugabe, the country’s sole leader since independence, denies his policies have ruined what was once one of Africa’s promising economies and blames Western sanctions for the economic crisis.
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