The Competition Commission has approved the takeover of Tongaat Hulett by the Mauritius-based company Magister Investments. Magister is closely linked to cut-price cigarette producer Gold Leaf Tobacco.
The conditions for the deal include that Magister must stick to investment commitments in Tongaat.
Also, workers may not be retrenched as a result of the transaction, and must set up an employment share ownership plan.
The Competition Commission has approved the takeover of Tongaat Hulett by the Mauritius-based company Magister Investments, with a number of conditions.
The group is controlled by the Rudland family, which owns a range of Zimbabwean businesses, including the cigarette group Gold Leaf Tobacco Corporation. Gold Leaf, which sells cheap cigarettes, has been accused of participating in the illicit tobacco trade, an allegation it has denied.
Magister has committed some R2 billion to underwrite a Tongaat rights issue. This will see it take control of the sugar and property group.
The Competition Commission says Magister holds interests in various sectors, including agriculture, transport and logistics, civil construction, and real estate in Guernsey, Mauritius, South Africa, and Zimbabwe.
The commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition.
But it approved the takeover on condition that Magister will keep to investment commitments into Tongaat.
The two companies may also not retrench any employees as a result of the transaction. Tongaat must maintain its “pre-merger headcount” for at least one year following the transaction, and is required to inform the commission of any retrenchments for the next three years.
Within three years, the company must also establish an employment share ownership plan that will hold an effective 5% in the South African operating subsidiary of Tongaat. Tongaat must also ensure that, within three years, Tongaat’s BEE shareholding will be at least the same as it was before the transaction.
The commission was also concerned about the effect of the proposed transaction on development in KwaZulu-Natal. Tongaat currently sources almost half of its feedstock from black farmers and cooperative members. Accordingly, the commission approved the transaction subject to a condition that requires Tongaat to source at least 40% of its feedstock from historically disadvantaged persons.
Tongaat is also required to continue to participate in the implementation of the Sugar Master Plan, which is an initiative supported by government, farmers, industrial users and retailers to help boost demand for sugar in the country.
Lastly, the commission approved the transaction on condition that if Tongaat sold land after the takeover, at least 20% of the land holdings will be sold to historically disadvantaged people
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