BUSINESS LIVE / 24 AUGUST 2018 - 05:07 / LISA STEYN
The Competition Commission has recommended that a deal for a Glencore-backed investor to acquire Chevron SA be approved, bringing the commodities trader closer to winning against a bid by Chinese oil company Sinopec.
The commission recommended to the Competition Tribunal that the deal, wherein Off The Shelf Investments 56 intends to acquire Chevron SA, be approved with conditions. Off The Shelf, Chevron SA’s 25% minority shareholder, is backed by Glencore to pursue the deal. The resources multinational will buy out a majority share.
Picture: REUTERS/MIKE BLAKE
"The commission found that the proposed transaction raises public interest concerns in the form of impact on employment, impact on industrial sector or region and the impact on the ability of small businesses to become competitive," the commission said.
It recommended conditions be imposed to address public-interest issues. These include the preservation of jobs following the merger and the continuation of a medical aid subsidy for Chevron retirees.
A "certain level" of black economic empowerment shareholding in Chevron SA post-merger had to be maintained, while a development fund focused on the development of small and black-owned businesses would have to be established. Chevron SA’s branded marketer programme, relating to marketers of the Caltex brand, would have to continue on no less favourable terms.
Off The Shelf would have to commit to an investment being made to deal with refinery capacity and related matters.
The conditions are largely the same as those imposed by the tribunal when it approved Sinopec’s proposed acquisition of a Chevron SA majority stake in March.
The Hong Kong-based oil company announced plans to acquire Chevron SA in March 2017, but in October Glencore bankrolled Off The Shelf, Chevron SA, which then exercised its right of first refusal of the deal. The $973m deal would see Glencore acquire 75% of Chevron SA and empowerment partners acquire 25%.
The assets include a 110,000 barrel-a-day refinery, a lubricants plant, 820 petrol stations and oil storage facilities.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER