The Competition Tribunal of South Africa has approved the proposed merger between South African Airways (SAA) and Takatso Aviation Proprietary Limited, with divestiture and employment conditions.
According to simpleflying.com, the strategic equity partner seeks to acquire a 51 per cent stake in the national carrier from the South African government, and the Tribunal has ratified the transaction subject to “conditions involving a moratorium on retrenchments and divestment of the shareholding” by Takatso’s minority shareholders.
The Competition Tribunal is an independent adjudicative body, and the country’s highest antitrust watchdog, adjudicating matters referred to it by the Competition Commission. It has the authority to approve or prohibit large mergers, and upon arriving at a decision, it is required to publish its reasons. Although the Tribunal stated that reasons would be issued in due course, the decision follows an approval recommendation by the Competition Commission two months ago.
The Department of Public Enterprises has formally accepted the Tribunal’s decision to approve the merger, recognizing it as a significant step in the government’s efforts to bring the national carrier back to its former glory.
It allows Takatso and the DPE to proceed with their transaction and finalize other essential regulatory requirements to conclude the merger, which the state hopes will turn SAA into a profitable and reliable carrier capable of competing in the domestic and international markets.
The Minister of Public Enterprises Pravin Gordhan said: “With this decision, the Competition Tribunal has affirmed our belief as the government that a revitalized and well-capitalized SAA presents the country with significant opportunities to boost economic connectivity and strategic reach that should benefit our economy and our people for years to come.
“I am confident that the repositioning of SAA sets a very good example of what can be achieved when the right financial and operational framework is given to state-owned companies, so they can fulfill their mandate to advance our economic transformation and development as a country.”
The minister added that the Tribunal’s ratification highlights the extent of the work done to ensure the transaction’s success. After years of struggling to make a profit, SAA was at risk of being liquidated if this semi-privatization deal was unsuccessful. Since exiting administration two years ago, the carrier has made significant progress on its path to recovery.
Following the Tribunal’s decision, Takatso Aviation will acquire 51% of the issued share capital of SAA from the South African government, while the DPE retains the remaining 49% shareholding.
Takatso Aviation was incorporated for this merger, with Harith General as the majority shareholder. The minority shareholders are Global Aviation t/a Global Airways and Syranix, both involved in South Africa’s low-cost carrier, LIFT, which is also based at Johannesburg OR Tambo (JNB) Global Airways owns the LCC, while Syranix co-owns the LIFT trademark.
When the Commission recommended the merger to the Tribunal, it cited the possible implications of the deal on competition in the domestic passenger airline sector. The transaction’s approval is now subject to the condition of the complete divestment of Global Aviation and Syranix from Takatso prior to implementation. The minority shareholders agreed to withdraw from the transaction last month, but Global Airways said that it cannot comment on the matter at this time.