Zimbabwean state media announced Monday that the government has bought out the interest of U.S. food giant H.J. Heinz in local cooking oil producer Olivine for what it said was a fair value of US$6.8 million for Heinz's 49 % stake in the unit.
The acquisition was made by the state-controlled Cotton Company of Zimbabwe, or Cottco, through the Industrial Development Corporation, another parastatal.
According to the Herald, the Olivine buyout was effected under a statutory instrument or decree allowing the government to take over the operation companies that reduced production in response to wholesale and retail price cuts imposed in July.
An Associated Press report a reporter seeking comment from Heinz executives was referred to the Cottco announcement of the deal.
The multinational company’s 2007 annual report said it wrote off a US$111 million net investment in the Zimbabwe unit during its 2006 financial year and planned to “explore strategic options to exit this business.”
Ironically, Heinz was the first international company to make a major investment in Zimbabwe following independence in 1980. Yet it has become the first international company to see its interest in a local firm nationalized, in effect - though legislation for the so-called "indigenization" of companies was only recently tabled in parliament.
Harare last year accused Heinz of halting cooking oil production because it had been barred by the U.S. government from purchasing raw materials from farms seized under the Zimbabwean government's land reform program since 2000.
With Heinz out of the picture, analysts doubt if the government will be able to maintain production at Olivine given the dismal record of other state-controlled companies.
Economist-consultant Luxon Zembe told reporter Jonga Kandemiiri of VOA's Studio 7 for Zimbabwe that Harare’s move will further discourage foreign investment.