South Africa's antitrust regulator has warned that BHP Group will have to get its approval to buy Anglo American if the companies agree the deal, the Financial Times reports. Country’s independent Competition Commission vows to assess any takeover on ‘public interest’ grounds.
After UK-listed Anglo last week rejected a £31bn approach, BHP sent a team led by chief executive Mike Henry on a charm offensive to South Africa, where Anglo was founded in 1917 and still operates iron ore, platinum, diamond and manganese mines.
While the government is unlikely to stand in the way of a deal if it is approved by shareholders, South Africa’s independent antitrust authority, the Competition Commission, said that “a mandatory merger notification will be required where any transaction involves the change of control over the business of Anglo in South Africa.”
The commission typically follows a two-pronged inquiry: first, whether the deal would reduce competition in South Africa, and whether it is justifiable on “public interest” grounds — a broad brush that includes the impact on a sector, on jobs, on historically disadvantaged South Africans, and the ability of industries to compete globally, spokesperson Siyabulela Makunga told the Financial Times.
However, he said that since no deal had yet been tabled, he could not “provide any definitive views” on what role the Competition Commission would play.
In the past, South Africa’s competition authorities have used this “public interest” clause in the legislation to wring concessions out of large companies that have bought iconic South African groups before getting the green light.
This includes Anheuser-Busch InBev’s $106bn takeover of SABMiller in 2016, Walmart’s $2.3bn purchase of Massmart in 2012, and Heineken’s $2.5bn takeover of Distell last year.
Еhese concessions have typically included a commitment not to cut jobs at the lower rungs, a pledge to buy from local suppliers, promises to boost black economic empowerment and introduce employee share schemes. It can take up to three years for South Africa’s antitrust authorities to give a deal the green light, according to experts.
“These deals ultimately do get approval, the question is how long it takes and with what conditions attached. The public interest conditions are where we see non-commercial, even ideological, concerns manifest, and that can make everything a lot more onerous,”
said Michelle le Roux, a lawyer who acts frequently in South African competition cases.
BHP’s preliminary offer, which is conditional upon Anglo divesting its Johannesburg-listed subsidiaries — iron ore miner Kumba and Anglo American Platinum — has angered politicians in South Africa. Mining minister Gwede Mantashe told the FT last week he was personally opposed to a deal. State entity Public Investment Corporation is a major shareholder in Anglo.
With Henry’s team on the ground, BHP sought to limit the damage, saying on Thursday that its proposed structure “does not reflect a view on South Africa as an investment destination” but was based rather on “portfolio and commodity considerations”.
On Thursday, Reuters reported, citing its own sources, that Glencore Plc is also studying the possibility of submitting an offer to buy Anglo American. Thus, the company may enter the fight with BHP.
Source: Financial Times
