OWN CORRESPONDENT, Johannesburg | Tuesday
SOUTH African sugar and aluminium group Tongaat-Hulett is to look for offshore buys after its billion rand bid for a smaller sugar producer was denied by the country’s competition watchdog.
South Africa’s Competition Tribunal this week rejected Tongaat-Huletts’ bid to buy Transvaal Suiker Beperk (TSB), saying it would lessen competition in an effectively protected market.
The deal would result in a firm having market power and was likely to substantially prevent or lessen competition in South Africa’s refined white sugar market, the Tribunal said in a statement.
”We now have to look at different ways to secure our sugar business. If we are not allowed to make an investment in South Africa we will have to invest outside South Africa,” said Tongaat’s group executive director Johannes Magwaza.
Magwaza said the company would review the Competition Tribunal’s ruling before deciding whether to appeal.
”The tribunal found that there was some evidence of non-price competition which would be adversely affected by the merger,” the tribunal said in a summary of its 30 page decision.
Tongaat said in June it had made a one billion rand offer, including tax recoupments and debt to the owners of TSB, Hunt Leuchars & Hepburn, for all TSB’s assets.
The acquisition of TSB’s 8000 ha of irrigated cane estate, two mills and refinery with an annual output of 450000 tonnes of sugar, would make Tongaat the largest sugar producer in South Africa ahead of Illovo Sugar Ltd.
The tribunal also rejected Tongaat’s argument that the deal would make South Africa better able to compete in a distorted world sugar market, saying there were enough regulations to effectively protect the industry.
”The tribunal also found that technological, efficiency or other pro-competitive gains arising from the merger would not offset the negative impact of the transaction on competition,” it said.
An import tariff, the equitable sharing of proceeds between growers and millers making both parties exposure to the world market equitable and a single export channel effectively protected local producers from the world sugar market, the tribunal said. – Reuters