Competition Commission blocks Burger King South Africa sale
The new ownership would significantly reduce the shareholdings of historically disadvantaged persons.
The Competition Commission has thrown a spanner in the works for private equity fund ECP Africa’s ambitious plans to own Burger King South Africa and Grand Foods Meat Plant. The Commission blocked the sale between ECP and Grand Parade Investments on the basis that the new ownership would exclude black shareholders. “The merger would lead to a significant reduction in the shareholdings of historically disadvantaged persons in the target firm, from more than 68 percent to zero percent as a result of this merger,” said the commission.
Grand Parade Investments, which owns the country’s Burger King franchise, announced plans to sell the burger business last year, along with Grand Foods Meat Plant, which supplies the patties. But it’s been a difficult sell so far. The impact of Covid-19 on South Africa’s fast food retailers and restaurant industry knocked off a whopping R100 million from Burger King’s value, bringing the sale price down to R570 million and R3 million from Grand Foods Meat Plant, to R23 million.
The Commission further stated that the sales would negatively impact the greater spread of ownership of historically disadvantaged persons in the market.
ECP is one of the largest and longest-established private equity fund managers focused on Africa.