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The Competition Commission has approved, with conditions, a proposed tie-up between liquefied petroleum gas (LPG) suppliers Easigas and Reatile Gaz.
The duo aimed to merge their respective Southern African operations to create a “truly regional player” with improved efficiencies and reliability of supply to customers through the companies’ combined LPG supply and distribution infrastructure.
Easigas parent company Rubis Group would hold a 60% interest in the merged entity, with Reatile Gaz holding the balance, in a deal that the commission believed would result in a “significant prevention or lessening of competition” in the market.
The commission, however, found that the transaction would dilute historically disadvantaged South African (HDSA) ownership in the LPG market and placed a condition on the merger that the parties ensure sufficient HDSA representation on the board of directors and executive committee of the new entity.
“Reatile is majority-owned by HDSAs. Post-merger, Reatile will be a minority shareholder in the merged entity, which will not be majority-owned by HDSAs,” the commission said in a statement on Thursday.
The conditions placed on the transaction would also ensure Reatile’s strategic involvement in certain key decisions to “mitigate against the removal” of Reatile in the LPG market.