MANAGEMENT CONDITION IN TAMBANKULU SALE

MBABANE – The approval of the acquisition of Tambankulu Estates by the Public Service Pension Fund (PSPF) in the past year came with a certain condition.

In June last year, it was announced that Tongaat Hulett entered into an agreement with PSPF to sell Tambankulu Estates for E375 million. Tambankulu is an agri-business based on two privately-owned agricultural estates on the Black Mbuluzi River in north-eastern Eswatini. As per the norm, the transaction needed approval by the Eswatini Competition Commission. In the just released 2020/21 third quarter report, the commission reported one of the conditions it took into consideration while making the approval. “The merging parties will not assign the management of the target (Tambankulu Estate) to any miller. Authority should be sought from the Eswatini Competition Commission if such an agreement is considered,” ruled the commission.

Authority

There are three sugar mills in Eswatini owned by Royal Eswatini Sugar Corporation Ltd (Mhlume and Simunye Mills) and Ubombo Sugar Limited (Ubombo Mill). Illovo Sugar Ltd owns Ubombo Sugar Limited. These mills are members of the Eswatini Millers Association. Meanwhile, in reaching the decision, the commission said it considered the products of the firms and concluded that the relevant market was the growing of sugarcane in Eswatini. “There are no overlaps between the activities of PSPF and Tongaat in the relevant market. Post-merger, the market shares in the relevant market, market concentration, countervailing power and barriers to entry will not be affected.

However, concerns were raised on the post-merger management of the target entity (Tambankulu Estate). “The potential competition concerns that may arise from the transaction were found not to be merger specific but may occur as a result of action by the merging parties post-merger,” said the commission. In order to address any competition concerns that may arise as a result of a balance of power change post-merger the transaction was approved with the above-mentioned condition. ‎It could not be immediately established if this condition would affect PSPF’s future plans regarding the management of the estate, as Director Corporate Services at ‎PSPF Elkan Makhanya could not be reached for comment.

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