BURGER KING SALE: HOW WILL IT AFFECT FUTURE ACQUISITIONS?
MONEYWEB / 21 AUGUST 2021 - 21.25 / FIFI PETERS
Once improvement commitments have been made, the transaction is likely to be cleared by the Competition Tribunal shortly: Bakhe Majenge – chief legal counsel, Competition Commission.
FIFI PETERS: Well, the sizzling sale of Burger King South Africa to a private company may be back on the table. That’s after the Competition Commission, which initially blocked the deal over concerns that would leave the public at a disadvantage, has had a change in song. We get the details from Bakhe Majenge, who is the chief legal counsel at the Competition Commission.
Bakhe, thanks so much for your time. Just help us understand what is going on here, and what elements of the deal changed such that the commission is now approving the deal going through. BAKHE MAJENGE: Thank you very much. Good evening to you and your listeners. Do you recall that the transaction presented us with a difficult scenario in terms of which Burger King South Africa was moving from BEE shareholding of 68% to effectively a 0% BEE shareholding. What has changed is that we have received a much better package of commitment from Burger King, which we think will provide sufficient countervailing public interest to the loss of BEE shareholding. Essentially there are four main commitments which have been made by Burger King in South Africa. The first one is (the) expansion commitment in terms of which Burger King South Africa has committed a capital expenditure of about R500 million. It will also be increasing its stores from 19 to 115. It will also be increasing the number of permanent employees by 1 215, and be increasing the payroll benefit. In addition to that, it will also be increasing its local procurement spend. One of the most important features of the deal is that it will also establish an employee share-ownership scheme or programme in terms of which employees will effectively have a 5% stake in Burger King South Africa. And the last commitment is that it will sell its meat plant, which is based in Cape Town, to an HDI (historically disadvantaged individual) player. So this is essentially unlocking a value-chain opportunity within Burger King. The details of the HDI will be provided of course, by Burger King in South Africa; it is entirely up to Burger King. FIFI PETERS: So some of the terms that you listed as part of this transaction sound very similar to the initial package that was on the table. Just to understand with more clarity what has changed, perhaps you can give us an indication regarding the dilution that the Competition Commission was against initially with the previous package – what happens to that level of dilution now? Does it still go from 68% to effectively zero or, or not?
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Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER