By Lehlohonolo Lehana.
The Competition Tribunal has approved the proposed acquisition of Barloworld by a management-led consortium and Saudi Arabian investor group, Zahid.
This comes after the Public Investment Corporation (PIC), Barloworld’s biggest shareholder with 21.93%, in April accepted the Standby Offer for the acquisition of all of Barloworld’s ordinary shares for a cash consideration of R120 per share, with additional conditions, by the recently formed special purpose consortium, Newco.
Newco comprises Entsha Proprietary and Gulf Falcon Holding, a wholly-owned subsidiary of Zahid Group.
The tribunal considered the case during three hearings, held on June 17, July 2 and August 13.
Submissions were made by the Competition Commission, the buyers, Barloworld, the National Union of Metalworkers of South Africa and the Food and Allied Workers Union. The hearings covered questions from the tribunal, as well as changes to the proposed conditions after the unions gave their views.
One of the main conditions is that no South African employee may lose their job because of the merger for at least two years after it takes effect. The merged company must also keep all existing terms and conditions of employment unchanged during this time.
The agreement also requires Barloworld to give HDPs and participating employees a combined 13.5% ownership in the company. This will happen in two stages.
In Phase 1, to be implemented within one day of the merger’s conclusion, the Barloworld Empowerment Foundation will retain its 3.5% shareholding.
Phase 2 will see the acquisition of a further 10% stake in the company – split equally between an employee share ownership programme (ESOP) and a women-led HDP consortium, to be selected and approved by the merged entity.
Participating employees will be permanent staff employed for at least six months, most of whom are HDPs, not serving notice, facing dismissal proceedings, or employed temporarily.
Phase 2 must be implemented within 24 months of Barloworld’s delisting from the JSE and A2X exchanges, provided the acquiring firm’s “squeeze-out” rights under Section 124 of the Companies Act are exercisable.
The merged entity must also notify the Competition Commission at least 100 days before the 24-month deadline, providing details of the proposed shareholders in Phase 2, including proof of HDP classification.
The commission will have 45 days to review and either approve or request changes.