State-owned China Petroleum and Chemical Corporation (Sinopec) said on Thursday, that it had made significant progress on its proposed acquisition of a 75 percent control stake of Chevron South Africa.
This comes after the Competition Commission last week recommended to the Competition Tribunal that the proposed acquisition be approved with conditions. The other 25 percent equity of Chevron SA will continue to be held by a group of local shareholders, as requested by South African regulation.
In considering the transaction, the Commission noted that it was unlikely to substantially prevent or lessen competition in any of the identified markets. The Tribunal will now set down a date for a hearing to consider the transaction shortly.
The transaction is expected to be concluded unless the minority shareholders in Chevron SA successfully implement their right of first refusal.
SOIHL Hong Kong Holding Limited, a subsidiary of Sinopec, entered into an agreement in March 2017 to acquire the shares and related Interests in Chevron SA and Chevron Botswana from Chevron Global Energy Inc for approximately U.S.$900 million
The underlying assets include Chevron SA’s Cape Town refinery, which has a nameplate capacity of 100,000 barrels per day, a network of approximately 850 service stations, a lubricants blending plant in Durban, storage tanks and oil depot distribution facilities.
Chevron SA, which currently operates at a retail level under the Caltex brand, employs approximately 1,200 direct employees and supports approximately 56,000 jobs indirectly.
The transaction, if implemented, will be the single largest acquisition by a Chinese company of a controlling interest in a major South African company.
Sinopec is a significant Chinese manufacturer and supplier of petroleum and petrochemical products and prides itself as the largest oil and petrochemical products supplier and the second major oil and gas producer in China.
The Chinese firm has undertaken to maintain the current level of employment post-acquisition and not to retrench any employees, invest significantly in the Cape Town refinery, and increase Chevron SA’s current Broad-Based Black Economic Empowerment (B-BBEE) shareholding level among other things.
Sinopec said it views South Africa as a critically important investment destination and its undertakings are designed to ensure that the transaction will generate significant public interest benefit for South Africa.
– African News Agency (ANA)