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Takatso wants the competition commission to approve the SAA deal in early July

The parties claim that their proposed transaction is “pro-competitive in that it will result in a competitor.” [SAA] be maintained in the market on a sustainable basis. ”

  • SAA’s chosen strategic partner, the Takatso Consortium, wants the Competition Commission to urgently approve the deal.
  • The deal would see Takatso acquire a 51% stake in SAA, with the government 49%.
  • Takatso thinks the deal would actually improve competition in the aviation sector.

The strategic shareholder of South African Airways Takatso Consortium has submitted a merger application to the Competition Commission to approve the deal on an urgent basis by no later than July 8, 2022.

Obtaining the approval of the Competition Commission is one of the excellent steps needed to close the deal, which was first announced almost a year ago.

The application comes because critics continue to question what they consider to be a lack of transparency about the specifics of the deal. However, Public Enterprises Minister Pravin Gordhan has in the past told Parliament that details not provided will protect SAA’s competitiveness.

What is known is that Takatso will take over 51% of the shares of SAA and over a period of two years will have to invest about R3 billion in working capital in the airline.

According to the Competition Commission’s application document, which Fin24 has seen, Takatso proposes that the deal be pro-competitive, as it will keep a key competitor, namely SAA, “sustainable” in the market. Takatso denies that the proposed transaction will have a negative impact on competition in the aviation sector.

Takatso also states that there is no horizontal overlap between the activities of the majority consortium of the consortium, Harith General Partners, and its portfolio companies; and those of SAA.

It adds that SAA’s market shares are currently low. This, together with the fact that Takatso and Harith General Partners do not operate an airline, means that the merger will not result in a meaningful change in the market structure in South Africa and rather prevent the reduction of competition, according to the consortium.

However, much of the detail of the deal and related structures mentioned in the application document is marked as confidential.

Information not provided, due to claims of confidentiality, includes details of the Memorandum of Understanding between SAA and Takatso, the names and principal addresses of all companies that directly or indirectly control Harith, and the companies that control Harith directly or indirectly. Harith’s revenue for the fiscal year ended March 31, 2021, as well as the value of its assets, are also marked as confidential, as well as information about producers and suppliers to the company. SAA’s revenue is marked as confidential, as are its top corporate customers.

As for potential cuts, Takatso states that while the merger is unlikely to lead to cuts, it can not guarantee that it will not be necessary in the future, should operational requirements or the aviation industry change and thus to ensure that SAA has a viable business remains. forward.

Meanwhile, the Democratic Alliance has said that Finance Minister Enoch Godongwana wants to indicate whether the concerns raised by the National Treasury have been addressed in parliament over the SAA / Takatso deal “to the satisfaction of the National Treasury” .

In the opinion of DA MP Alf Lees, the deal is not transparent and he accused Godongwana of effectively “washing his hands of any responsibility” for the SAA / Takatso agreement and prior concerns raised by the National Treasury.

Godongwana recently responded in writing to Read that he (Godongwana) was not responsible for the agreement and that once the National Treasury had raised its concerns with the Department of Public Enterprises (SAA’s shareholder) there was no further role for him or National Treasury to to play.

In mid-May, Fin24 reported on an apparent ceasefire between Gordhan and the National Treasury over the Takatso agreement following the withdrawal of Treasury from a document expressing concern because it did not play a role in Takatso’s selection and that the deal posed a continuing financial risk to the state represented. .

Godongwana told Scopa that Treasury now agrees with Gordhan’s argument that the Takatso process falls under the Companies Act and not the Public Finance Management Act (PFMA). It is therefore governed by the DPE.

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Takatso wants the competition commission to approve the SAA deal in early July

Source link Takatso wants the competition commission to approve the SAA deal in early July

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