INTERNATIONAL COMPARATIVE LEGAL GUIDE ON MERGERS & ACQUISITIONS, 2021 – SOUTH AFRICA CHAPTER
Deputy Chairman, Ezra Davids, and partner, Ryan Kitcat, wrote the South African chapter of the International Comparative Legal Guide on Mergers & Acquisitions for 2021.
The chapter covers:
- Relevant Authorities and Legislation
- Mechanics of Acquisition
- Friendly or Hostile
- Deal Protection
- Bidder Protection
- Target Defences
- Other Useful Facts
An extract, on relevant new laws or practices, follows below.
‘The Competition Amendment Act, 18 of 2018 has introduced a national security review, which requires the President to appoint a committee to consider whether a merger involving a foreign acquiring firm may have an adverse effect on the national security interests of South Africa. If it would, the proposed merger may be prohibited on national security grounds. As to what constitutes a national security interest, the President must identify and publish in the Government Gazette a list of national security interests. It remains to be seen how the national security review will be implemented.
That legislation has also elevated the importance of the public interest review in that it is possible that the competition authorities may approve an anti-competitive merger on the basis that it can be justified on substantial public interest grounds. The competition authorities must first determine, with reference to various factors, whether a proposed merger is likely to substantially prevent or lessen competition. If they find that the merger is likely to substantially prevent or lessen competition, they must then determine whether the merger: (i) is likely to result in any technological efficiency or other pro-competitive gain that will offset the adverse effects to competition, and would not likely be obtained if the merger is prevented; and (ii) can be justified on substantial public interest grounds.
At the date of writing, South Africa has not (unlike some other jurisdictions) enacted special COVID-19-related protective measures against the acquisition of companies. We are also noticing an increase in shareholder activism and other activist-like interventions, including M&A-related activism, in South Africa. This is consistent with global trends and a function of a regulatory and corporate governance framework in South Africa that enables shareholder and activist interventions.’Read further