The Competition Commission has prohibited the sale of Sasol’s sodium cyanide business to Czech Republic-based specialty chemicals company, Draslovka.
The commission’s approval was a key condition precedent to the transaction.
The commission on November 26, the last day of the merger review period, said it had based its decision on pricing effects which had been raised and dealt with by the commission at an earlier stage in the review process.
Both Sasol and Draslovka had engaged with the commission throughout the review process and the pricing effects issue was fully evaluated by the commission during these engagements.
The prohibition of the transaction was therefore unexpected, Sasol said on November 29.
The parties remain of the conviction that the transaction is in the interest of the cyanide business operations, its employees and South African customers, given that it is anticipated that Draslovka will contribute to the cyanide business operations and enhance its competitiveness.
In this regard, Draslovka’s plans for the business include expansion and capital investment, which Sasol said would bring a number of significant benefits to the country, including significant foreign investment, employment, economic upliftment and long-term stability of supply for the mining industry.
The parties are, therefore, of the view that the commission’s decision “does not take the full circumstances and the interests of stakeholders and customers properly into account”.
Sasol, however, stressed that the pricing effects issue was raised again only on the day that the decision was due to be issued and said that the commission “therefore afforded the parties very limited time to engage the commission”.
Sasol is considering its options in light of the decision, including potentially approaching the Competition Tribunal to reconsider the matter.
Until this matter is resolved, Sasol said it would continue to manage the business safely to provide stable supply of cyanide to customers. All employees of the cyanide business will remain Sasol employees.