Mumbai: Zimbabwe''s government has taken over US food giant H.J Heinz''s 49-per cent stake in Olivine Industries, the African nation''s leading cooking oil maker, for $6.8 million and handed its management to Cotton Company of Zimbabwe (Cottco), a firm earlier owned by the state.

Agro-processing company Cottco, which was a state enterprise until its privatisation in 1997, announced it had bought H.J Heinz''s stake in Olivine Industries in a deal facilitated by government-owned Industrial Development Corporation.

"The board of directors of The Cotton Company of Zimbabwe (Cottco) would like to advise shareholders that the company has acquired a 49 per cent shareholding in Olivine Holdings Limited from H.J Heinz through the Industrial Development Coroporation of Zimbabwe (IDC) for &6.825 million," Pius Manamike, company secretary, said in a statement to shareholders.

"This acqusition will add critical mass to the company while allowing the company to diversify from its traditional revenue streams and operating risks."

The deal marks the first time that the government has effectively taken full control of a company from foreign investors and comes after President Robert Mugabe''s threat to nationalise firms that flouted price controls.

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.

Mugabe had in July also warned that manufacturers of basic commodities such as cooking oil who cease production as a result of government-imposed price controls would be nationalised.

His government is also planning to introduce legislation that would ensure black Zimbabweans hold the majority stake in all companies, including the local arms of multinationals such as Barclays Bank and mining giant Rio Zim.