MEDTECH Holdings’ (MedTech) says it is in negotiations to sell some of its assets while it is also in the market to acquire a business in a different sector.
In a series of cautionary statements issued starting in September this year, the company said its directors are “in discussions to sell certain company net assets including investments in subsidiaries and also for the acquisition of a business in a different sector”.
“The proposed transactions would constitute a ‘Category 1’ transaction under Part X of the Securities and Exchange (Zimbabwe Stock Exchange Listings Requirements) rules, 2019 and are likely to constitute a reverse takeover,” the company reiterated in a statement last week.
According to the Zimbabwe Stock Exchange listing rules, a “Category 1” transaction is one “where any percentage ratio is 30 percent or more”, of the aggregate market value of all the equity securities of the listed company.
MedTech’s market capitalisation is currently at about $46 million, which would put the value of the transaction at a minimum of $13 million.
The group is a prominent player in the provision, manufacture and distribution, of a wide range of products for the healthcare and consumer sectors.
The company’s subsidiaries include S-MART Agencies, Zvemvura Trading and MedTech Food and Beverage.
Up until recently, the group operated Zimbabwe Pharmaceuticals, a Bulawayo-based pharmaceutical manufacturer. It has since disposed of that business “due to low local demand and business environmental issues”.
Meanwhile, the company’s stock has continued to dazzle on the local bourse, topping the market with gains of 7 500 percent this year.
Enock Rukarwa, a research analyst at FBC Securities Research says there is not much in the fundamentals of the company to warrant such gains.
“Fundamentally, MedTech has been making losses from 2012 to 2015 due to various factors such as capital inadequacy and slow debtor repayments.
“Being a heavy importer MedTech has also been at the mercy of delays in foreign payments remittances to supplies, smuggled competing products and increased competition by unregistered operators,” he said.
“The company, however, has benefited from its low share price. Penny counters also do not have circuit breakers implying that the price can increase by even 100 percent on a single day unlike blue chip counters whereby the price increase is within plus or minus 20 percent on a single day,” he added.
MedTech’s shares closed trading on the ZSE at 1,52 cents on Friday.
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