Companies scramble for mergers

Business
Three mergers were approved during the first- half of this year as companies consolidate in the wake of a depressed economic environment.

Three mergers were approved during the first- half of this year as companies consolidate in the wake of a depressed economic environment.

BY VICTORIA MTOMBA

Competition and Tariff Commission (CTC) acting director Benjamin Chinhengo said more companies were notifying the commission on intentions to merge but were failing to meet the financial obligations required by the commission to do so.

“So far we have seven applications that are on the queue. Three are still being processed and we expect two of these to be complete in the next two weeks and the other one we have just started to process. The other four are yet to be paid for,” Chinhengo said.

He said the commission requires 0,5% of the turnover or assets although it has been realised that the amount could be higher than expected.

An amount of between US$10 000 and US$50 000 was set as a result. The three mergers that were approved in the first half of the year include Sakunda Petroleum and Sakunda Energy, Industrial Development Corporation’s Surface Investments and Wilma International and Schweppes and Beitbridge Juice Concentrate.

Sakunda Petroleum, an investment vehicle in which South Africa’s Puma Energy Africa Holdings is a shareholder, acquired Sakunda Energy assets.

Wilma International acquired 45% in Surface Investments and Schweppes Zimbabwe Limited took a controlling stake in Beitbridge Juice Concentrate.

Chinhengo said although the commission approved one merger during the first half of last year, a total of 11 merger deals were approved in 2013.

The CTC is experiencing operational challenges due to serious underfunding and high labour turnover suffered during the country’s decade-long economic meltdown.

Since its inception in 1998 up to September 2010, the commission handled over 1 000 competition cases with 53% involving restrictive and unfair business practices. At least 47% of that were mergers and acquisitions.

CTC is a non-commercial statutory body that gives regulatory and advisory services on governmental policies.

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