M&A transaction in South Africa

The high rates of economic growth exhibited by SAR over the recent years have made it an attractive destination for foreign investors considering launching a business in South Africa. So, let’s take a look at what requirements they must meet to successfully conduct an M&A transaction in Africa.

Regulatory Framework

Acquisitions & takeovers of public enterprises in SAR are normally done as:

• Statutory or regular mergers allowing two or more companies to form one entity;
• M&A agreements whereby a company & its stakeholders planning to conclude an M&A deal in South Africa sign an M&A agreement (normally used for friendly takeovers of PLCs);
• Public offering of a target company’s shares;
• Selling all or most of a target company's assets (whereby investors seeking to acquire a South African company (including its liabilities) may purchase its business or assets); unlike selling shares, transactions like these have a more complex structure & require including in an M&A agreement:
  • each & every asset to be purchased;
  • each & every obligation an acquirer undertakes to fulfil.

Information to be Disclosed

Negotiations related to acquisition of a public company in South Africa are generally confidential. However, a notice must be issued if there's any concern about privacy. An announcement must also be made if an acquirer:

• has communicated their intention to make an offer;
• is ready to proceed with making good on their offer.

The announcement must contain essential details related to the offer, including:

• an acquirer’s identity;
• terms of the offer (including the mechanism of implementation & information about guarantees); 
• information on beneficial interests of the company directly or indirectly controlled by the acquirer.

Government Influence

Normally, authorities can’t restrict the conclusion of M&A deals in the South African Republic; however, they may require participants to comply with competition requirements or impose restrictions on deals involving regulated industries.