Negotiations for grinding media division to be sold to Magotteaux and cast products division to Amsted Rail at advanced stage.
The Competition Commission has recommended that the Competition Tribunal approve the proposed transaction, with conditions, in which Barnes Southern Palace will buy Scaw Metals Group from the Industrial Development Corporation (IDC).
The Competition Tribunal has conditionally approved the transaction, in terms of which Barnes Southern Palace (Pty) Ltd will acquire Scaw South Africa (Pty) Ltd from the Industrial Development Corporation (IDC).
The Barnes Group is active in the manufacturing of wire and wire related products, amongst others. Barnes Southern Palace is a wholly owned and managed black investment holding company with diverse interests in real estate, industrial companies, information technology, metals, mining and construction.
Scaw is a South African based steel maker and currently consists of the following divisions: cast products, grinding media products, wire rod products and rolled products divisions. Scaw beneficiates iron ore and scrap to produce a wide range of steel products used in the mining, rail, power, offshore oil and gas, construction, commercial and other industrial sectors.
The commission found that the proposed transaction may create a platform for the sharing of competitively sensitive information between Barnes and Consolidated Wire Industries (CWI) which is owned by the IDC, as the IDC will retain a minority shareholding in Scaw after the merger.
In order to address information sharing concerns, the transaction was approved subject to a condition that for as long as the IDC is able to appoint directors to the respective boards of CWI and Scaw, the IDC shall ensure that its representatives on the board of Scaw are not the same persons serving, nominated and/or appointed on any board or management committees or subcommittees of CWI. Further, the nominees appointed by the IDC to the board of Scaw shall not have served on the board of directors and/or management committees or subcommittees of CWI, for a period of one year prior to being nominated to the board of Scaw.
Employment conditions have been put in place as well as conditions, which will ensure that the merged entity will supply small steel mills with direct reduced iron, which will enable them to produce better quality steel.
Meanwhile it has been reliably learnt that negotiations with prospective buyers for the other two divisions – cast products and grinding media products – are at an advanced stage. It is believed that the grinding media division is to be sold to Magotteaux and the cast products division to Amsted Rail.