RWCo GmbH says it remains interested in its N$2-billion deal to acquire Ohorongo Cement, despite having terminated the purchase agreement.
This comes as RWCo GmbH had its plan of investing N$2 billion in Namibia’s cement market derailed due to regulatory hurdles cited by RWCo, including challenges with the Namibian Competition Commission (NaCC).
The terminated deal, sealed on 6 April 2023, involved acquiring 100% ownership of Schwenk Namibia, which holds a 69.83% stake in Ohorongo Cement and full control over Energy for Future (Pty) Ltd.
The terminated deal’s Legal Advisor Jens von der Thuesen said the NaCC posed significant hurdles for RWCo, primarily due to conditions lacking legal basis under the Namibian Competition Act and ambiguous wording, which risked third-party involvement in Ohorongo Cement without RWCo’s control.
He said RWCo prioritises the need to influence future shareholders to prevent competitor or hostile involvement while expressing willingness to partner with Namibian investors.
“It is possible that a competitor or a hostile shareholder gets involved with Ohorongo – which is obviously not acceptable. The buyer RWCo was and is interested in partnering up with Namibian investors and they also had one Namibian partner as part of the investor group. But they need to have a say and a degree of control with regard to who becomes an Ohorongo shareholder in the future. The risk of competitors or hostile shareholders in Ohorongo was and is not acceptable,” he exclusively told The Brief.
“RWCo had aimed to find reliable Namibian partners for the acquisition but insisted on freely selecting partners based on mutual business interests, rejecting the notion of being compelled to partner with unknown entities due to imposed conditions.”
The Lawyer noted that given the investors’ background in building materials, it’s unlikely they’ll pursue alternative investment avenues in Namibia as their focus remains fixed on the specific target, Schwenk Namibia, particularly Ohorongo.
Recommendations for enhancing Namibia’s business environment include urging authorities, particularly the NaCC board, to adhere to legislative rules and refrain from issuing decisions without legal basis.
“The authorities (meaning the NaCC, especially the NaCC board in this specific case) need to respect and follow the legislative rules and not issue decisions without a legislative basis. To say it clearly, RWCo is not seeking any special treatment or a “red carpet”. But they expect fairness, transparency and legal certainty within the processes that are required,” he said.
He further added that fruitful and positive dialogue between the buyer company and the Development Bank of Namibia (DBN), which holds an 11% stake in Ohorongo Cement, occurred from the early stages of the transaction until its surprising end.
Meanwhile, after the deal’s termination, RWCo lodged a review against NaCC’s decision, still pending termination.
However, on 7 February 2024, Schwenk Zement International ended ties with the deal due to ongoing regulatory review delays.
This followed NaCC’s Board of Commissioners’ approval of the proposed merger with conditions on 27 October 2023.
While the transaction aims to promote local ownership in Ohorongo Cement, conditions were imposed post-transaction, prohibiting the acquiring or merged company from purchasing additional shares for a year.
The NaCC said the provision aims to offer Namibian-owned businesses a chance to acquire available shares during this period. If no Namibian entity acquires the shares within a year, the acquiring or merged company may do so.
