Moving from black-owned to black-controlled empowerment
Last year was not only a year of mergers and acquisition deals, but also saw a substantial increase in the value of black economic empowerment transactions.
According to the Ernst & Young 17th Edition of Mergers & Acquisitions handbook launched in Johannesburg yesterday, the value of BEE deals increased to R96billion from R56billion in 2006.
The largest BEE transaction to date was energy company Sasol's planned sale of a 10percent stake to blacks valued at R17,9billion.
Other major transactions included Anglo Platinum selling 51percent of the Lebowa Platinum Mine to Anooraq Resources.
Royal Bafokeng's planned acquisition of a controlling stake in the Mutual and Federal Insurance company for R8billion, which was terminated yesterday, was also counted among major deals from last year.
Dave Thayser, director of Ernst & Young transaction advisory services and the editor of the book, said: "Besides the growing influence of BEE, several commentators noted that it is changing in complexion too."
He said the change has been described as the "second phase BEE", which included the restructuring of existing empowerment transactions and expansion of black businesses.
The country is moving from a black-owned to a black-controlled situation, he said. He added that South Africa has also seen a substantial increase in the value of mergers and acquisition transactions last year as the top 10 deals came in at R208,1billion, a 51,5percent increase from 2006.
Thayser said foreign direct investment was a key driver of mergers and acquisition activity, with the announcement of two of the largest deals for the year being Bain LLC's acquisition of Edcon and the 20percent investment by China's largest bank, the Industrial and Commercial Bank of China into Standard Bank.