By Pharaoh Lomazolo, The Herald

Seed breeding concern Seed Co is seeking shareholder approval for its proposal to acquire a 100 percent stake in Quton, the Cotton Company of Zimbabwe’s cotton seed producing subsidiary.

In this respect, an extraordinary general (EGM) meeting has been scheduled for May 9 to give shareholders a chance to approve the acquisition of a 100 percent shareholding in Quton valued at $474,5 billion by way of a share swap of 29,6 million Seed Co shares to the seller.

The company also revealed that the issue of the shares would represent a dilution of 15,6 percent to existing Seed Co shareholders. If the transaction goes through, Cottco will increase its shareholding in Seed Co to 50 percent. For the transaction to sail through, the company needs a majority vote representing 75 percent of the votes exercisable by the members present or voting by proxy with the exception of Cottco, who are an interested party.

"Approval of the transaction at the EGM will be achieved by a majority vote representing 75 percent of the votes exercisable by the members other than Cottco, present and voting, either in person or by proxy," said Seed Co in a statement.

If Seed Co’s bid succeeds, it will be translate into a major boost to its present business. This would diversify its revenue streams, which presently come predominantly from the production of maize seed. Cotton seed has more flexibility in pricing than maize seed and also cotton is a major foreign currency earner.

Presently, Quton is 100 percent owned by Cottco and is currently the sole producer of cotton planting seed on the local market. The company is also developing its own seed varieties in order to ensure continuity in the event that it cannot continue to produce Cotton Research Institute (CRI) varieties.

Quton’s plant is eight years old and has a production capacity of about three tonnes of seed per hour, which translates to 10 000 tonnes per year.