Schwenk Zement International GmbH has terminated its purchase agreement with RWCo GmbH regarding shares in Schwenk Namibia (Pty) Ltd.
According to RWCo, the stumbling block emerged as the Namibian Competition Commission (NaCC) conditions attached to the approval of the deal, which according to RWCo, lack any legal basis under Namibian competition law.
The deal, sealed on 6 April 2023, encompassed the acquisition of 100% ownership of Schwenk Namibia, a company holding a 69.83% stake in Ohorongo Cement and complete control over Energy for Future (Pty) Ltd.
In response, RWCo lodged a review against the NaCC’s decision, still pending at the time of termination.
Nevertheless, on 7 February 2024, Schwenk Zement International decided to cut ties with the deal, citing an aversion to further delays caused by the ongoing regulatory review.
“During the course of the acquisition process, which lasted around two years, “incomprehensible developments and inconsistencies in the relevant state institutions in Namibia came to light” that would not only impact potential investors but also negatively impact the Namibian people,” RWCo noted.
This comes after the NaCC Board of Commissioners on 27 October 2023, approved the proposed merger with conditions.
The Commission’s decision is based on the proposed merger not likely to prevent or lessen competition in Namibia, as envisaged by Section 47(2) of the Competition Act, 2003.
However, the transaction raises an opportunity to promote local ownership through additional Namibian Ownership in Ohorongo Cement.
For the above purpose, conditions were imposed after completing a transaction, regardless of any rights of first refusal or call options, the acquiring or merged company cannot purchase additional shares for one year from the date they are offered for sale.
NaCC Corporate Communications Practitioner Dina //Gowases said the provision aims to give Namibian-owned businesses a chance to acquire available shares during that period.
“The right of first refusal and/or call option of the acquiring and/or merged undertaking notwithstanding, at any stage after the implementation of the transaction, should any shareholding become available for purchase, the acquiring and/or merged undertaking shall be prohibited from acquiring any further shareholding for a period of one year from the date of offering of such shareholding, to allow opportunity to a Namibian owned undertaking to acquire such shareholding,” she explained.
Additionally, the NACC stipulated that if no Namibian entity successfully purchases the shareholding by the end of the one year, the acquiring or merged company may acquire the shareholding if it chooses to do so.
