China’s Sinopec Corp says it has won its bid over Glencore for Chevron South Africa and Botswana assets as it gained the South African government’s favour.
According to a statement released by Sinopec, the Competition Commission of South Africa recommended that the $900 million (R111 578 220 000.00) transaction with Asia’s largest refiner be approved with certain conditions.
The South African government later announced that it had reached an agreement with the Asian refiner on public interest issues adding that the final transaction is yet to be approved.
However, Sinopec could still lose out, as the its statement reads: “Implementation of the transaction is conditional on approval by the competition authorities of South Africa, and will be concluded unless the minority shareholders in Chevron South Africa successfully implement their right of first refusal,”.
In October, the minority shareholders in Chevron’s South African subsidiary exercised pre-emption rights following delays to the Sinopec deal and brought in Glencore, which placed a $937 million bid.
At stake is a 75% share in Chevron’s South African subsidiary that runs a 100,000-barrels-per-day oil refinery in Cape Town, a lubricants plant in Durban and 820 petrol stations and other oil storage facilities.
The acquisition includes 220 convenience stores across South Africa and Botswana.
According to a representative, “there’s no change to the position of Glencore or Off The Shelf Investments Fifty Six (OTS, the minority shareholders) relating to the proposed acquisition... Good progress is being made in satisfying OTS’ conditions to complete the transaction.”
An Beijing-based source says the final decision of South Africa’s Competition Tribunal is to be expected in March or April.
“Sinopec was thrown into confusion after local shareholders exercised pre-emptive rights ... but then the company was advised by the government to proceed with regulatory procedures,” adds the source.
Sinopec has made promises to the South African government. These include investments over five years post-acquisition to upgrade the Cape Town refinery into a world-class plant, and to develop the fuel marketing business by introducing small and black-owned businesses as fuel retailers.