By Lehlohonolo Lehana.
The Competition Commission has recommended the conditional approval of the controversial proposed acquisition by the Takatso consortium of 51% of South African Airways (SAA).
This follows the Commission’s investigation into Takatso’s intention to acquire 51% of the national carrier from the government.
Conditions on the proposed transaction recommended by the commission relate to divestiture and employment, which were initially rejected by the parties and the commission first taking a decision to recommend a prohibition of the merger.
“The Competition Commission has recommended that the Competition Tribunal approve the proposed merger between Takatso Aviation Proprietary Limited and South African Airways State-Owned Company Limited with divestiture and employment conditions. If the merger is approved by the Tribunal, the remaining 49% shareholding in SAA will be retained by the DPE,” the commission’s spokesperson Siyabulela Makunga said on Friday.
The deal was announced by Public Enterprises Minister Pravin Gordhan in July 2021, but has been plagued by numerous delays.
“The merger will likely facilitate the exchange of competitively sensitive information between SAA and Lift, through Global Aviation and Syranix having shareholding and the ability to appoint directors to Takato’s board of directors,” Makunga said.
“Takatso will have access to SAA’s competitively sensitive information by virtue of its majority stake in SAA, pursuant to the proposed merger. This concern is further exacerbated by the fact that the domestic passenger airlines market is highly concentrated, barriers to entry are high and is amendable to coordinated effects.”
But the commission doesn’t believe the merger raises any other substantial public interest concerns.
Takatso, a company newly incorporated for the purposes of this proposed merger, is a consortium in which asset management firm Harith General Partners Proprietary Limited, holds the majority shareholding.
The minority shareholders in Takatso are Global Aviation Operations Proprietary Limited and Syranix Proprietary Limited.
Public Enterprises department said last month it had followed a fair and transparent process in its pursuit to achieve the government’s objectives of finding a strategic equity partner (SEP) for SAA following the airline’s exit from the business rescue process.
It said the selection of the SEP aimed to bolster SAA’s competitiveness in a cutthroat market, ensure its commercial viability and sustainability, and contribute positively to the country’s economy instead of burdening the fiscus.
The DPE refuted suggestions that Takatso will not be able to raise the necessary capital to grow SAA, claiming these suggestions are unfounded because Harith has already raised funds from a diversified investor base and obtained internal approvals for their equity contribution.