Financial Mail and Business Day

Tribunal approves Burger King sale

Katharine Child Retail Writer childk@businesslive.co.za

The Competition Tribunal has given the sale of the SA franchise of Burger King by Grand Parade the go-ahead with conditions, allowing foreign investment worth about R470m to flow into SA. The tribunal website states the deal was approved subject to conditions, but does not specify what conditions.

The Competition Tribunal has given the sale of the SA franchise of Burger King by Grand Parade the go-ahead, with conditions, allowing foreign investment worth about R470m to flow into the country.

The tribunal’s website says the deal was approved on Friday, but does not specify what conditions were put in place.

Burger King was sold by Grand Parade, a BEE investment holding company, to US private equity fund Emerging Capital Partners (ECP).

The tribunal, which acts like a court, must make a final decision on large business buyouts, and appears to have approved the deal, though its spokesperson did not respond to multiple requests for comment. Its website said it still needs to issue the reasons for its decision.

In June, the Competition Commission, which makes recommendations on mergers, blocked the deal on concerns that it would reduce the BEE shareholding from 68% to 5%, even though 99% of Grand Parade shareholders wanted to sell Burger King.

The commission was forced to backtrack on prohibiting the merger after an outcry from business leaders, who pointed out the decision would make it harder for black business owners to sell their assets and would deter foreign investment.

The deal has been closely watched as investors try to gauge authorities’ attitudes towards foreign direct investment, while purchase talks are under way between Europe’s largest brewer, Heineken, and Distell, SA’s largest alcohol producer.

In August the commission and Grand Parade came to an agreement on the sale, which was presented before the tribunal for adjudication.

The deal that the commission accepted was not that different from that first offered when the sale was proposed.

To get the deal over the line after it was blocked, Grand Parade agreed to sell its Burger King meat plant to a black buyer and not to ECP.

The contractual deadline between the ECP and Grand Parade for completing the sale was extended from mid-July to September 20, due to the continued negotiations with the competition authorities. Had the deal not been given the goahead on Friday, the two parties would have had to extend the time needed to fulfil a sale.

The sale was initially expected to be finalised by June 2020, but a month later, Grand Parade said the terms of the sale had been renegotiated after Covid-19 wiped off about R100m of Burger King SA’s value.

Grand Parade CEO Mohsin Tajbhai could not be reached for comment.

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2021-09-21T07:00:00.0000000Z

2021-09-21T07:00:00.0000000Z

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