Commission recommends unconditional approval of AFGRI merger - CNBC Africa

Commission recommends unconditional approval of AFGRI merger

Southern Africa

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Agriculture. PHOTO: Getty Images

The Commission has found that the proposed merger whereby AgriGroupe, a private investments company, will acquire 100% of AFRGRI, a JSE listed agricultural and diversified foods group, should be given the go ahead as there is no competitive overlap in the activities of both parties.

“AgriGroupe and its controlling entity, Joseph Investment Holdings, do not offer any products or services that can be considered to be similar and interchangeable to those offered by AFGRI in South Africa,” said the Commission in a statement.

As a result, the Commission believes that the proposed merger is unlikely to substantially prevent or lessen competition in the market for agricultural commodities, storage, trading and other related services.

This follows after various stakeholders raised concerns regarding the effect of the proposed transaction on public interest issues. For example, government raised concerns that post-merger; AgriGroupe is likely to increase storage costs for grain in KwaZulu-Natal, Mpumalanga and Gauteng as it will own the majority of silos in these regions.

Stakeholders also believed that AgriGroupe would export grain to international countries such as the United States and Canada in order to increase the price of maize in South Africa.

Unions such as the African Farmers Association of South Africa, the South African Communist Party and the National African Farmers Unions also raised concerns that the merger may impact black farmers.

The Commission however stated that they did not find evidence to suggest that the transaction will have a negative effect.

“The Commission found that AgriGroupe would not have the incentive or the ability to direct or control the trading of grain from South Africa to other countries as it might not be economically feasible to do so and because AFGRI in any event does not currently trade in commodities,” continued the statement.

“The Commission did not find any evidence that AgriGroupe will not continue to provide the assistance currently provided by AFGRI to small farmers or will stop extending loans. With respect to employment, the Commission found that the merger is in fact likely to create job opportunities in the long term.”