The combined value of black economic empowerment (BEE) merger-and-acquisition deals was R6,3-billion higher in 2005 than in 2004, a review by Ernst and Young showed on Tuesday.
Although the number of transactions dropped from 243 in 2004 to 238 in 2005, the total value increased from R49,9-billion to R56,2-billion, the company said in a media release.
The company’s associate director, Ashraf Dada, said the ongoing issue for BEE transactions was the measurement of the value they can potentially deliver.
Dada said the Old Mutual deal was a good example of one of the key BEE trends of 2005, which was to include black management and staff in employee trust schemes.
”One of the tangible benefits is increased motivation and retention of staff,” he said.
The features of the Old Mutual deal include that it is broad-based and there are clear incentives for the empowerment business partners.
Fifty transaction worth over R100-million each were analysed in the company’s 15th review in 2005.
Balancing the value versus the cost of doing BEE transactions remained an issue for shareholders, and analysis showed how companies were increasingly disclosing the cost of doing a BEE deal.
”BEE deals come at a cost to existing shareholders, whether as a result of being asked to give up a portion of their existing holdings at a discount to market price or as a result of the company assisting with funding.”
Women’s groups became an increasingly prominent feature of broad-based consortia in BEE deals in 2005, Dada said. — Sapa