Home South Africa News Call for acceptance of new conditions in R500m Burger King sale

Call for acceptance of new conditions in R500m Burger King sale

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GRAND Parade Investments (GPI) and US private equity fund ECP Africa Fund (ECP) yesterday appealed to the Competition Tribunal to accept revised empowerment-focused conditions for the more than R500 million sale of Burger King South Africa.

This followed the Competition Commission’s unprecedented decision on June 1 this year that the sale of the US burger franchise in South Africa by GPI to ECP be prohibited, not because of any issues of competition, but because the deal would have reduced the shareholding of historically disadvantaged people. It was the first time that such a deal had been blocked by the commission on the grounds of public interest alone.

Yesterday, it emerged in proceedings before the tribunal that GPI and ECP had engaged the Department of Trade, Industry and Competition and that a revised set of conditions to the transaction were formulated that were aimed at overturning the commission’s concerns about the dilution of black empowerment interests.

Bukhosibakhe Majenge, the chief legal counsel for the commission, told the tribunal that the commission had indicated it would accept the revised conditions of the transaction if they were favourably received by the tribunal. The parties had indicated that there would be no retrenchments from the deal.

He said the revised conditions rested on four pillars. The first was a clear commitment to substantially expand Burger King SA, including R500m capital expenditure by 2026, increasing the number of outlets to 150 from 60, employing an additional, not less than 1 250 historically disadvantaged individuals as permanent staff, and increasing the payroll and employee benefits by no less than R120 million.

The second pillar was the establishment of an enterprise supplier development programme, the details of which were deemed confidential, but which Majenge said represented a significant public interest factor in the transaction.

The third pillar was the establishment of an employee share ownership programme that would give employees a 5 percent stake in Burger King South Africa, while the fourth pillar was the disposal of the Grand Meat Plant to a historically disadvantaged buyer, and which would also positively affect the employees’ interests in their share ownership programme.

Simon Eppel, appearing on behalf of the SA Clothing and Textile Workers Union and who was representing workers at the Grand Meat plant, said the terms of the sale of Burger King SA, and the proposed subsequent sale of the Grand Meat plant, should be tied into the tribunal’s judgment, as the sale of the meat plant at a later date may introduce additional risk to the employees working there.

GPI is 66 percent black-owned, and one of few empowered investment holding companies listed on the JSE.

GPI was established in 1997.

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