AIR LIQUIDE ACQUIRES 16 AIR SEPARATION UNITS OWNED AND OPERATED BY SASOL, SUBJECT TO PUBLIC INTEREST CONDITIONS IMPOSED BY THE TRIBUNAL
The Tribunal has, subject to a range of public interest conditions, approved the acquisition of 16 Air Separation Units (“ASUs”) owned and operated by Sasol South Africa Ltd (“Sasol”) by Air Liquide Large Industries South Africa (Pty) Ltd (“ALLISA”). The conditions relate to B-BBEE, employment, availability of spare liquid oxygen for the healthcare sector, preferential procurement and supplier development, among others.
The merger parties
The 16 ASUs, based at Sasol’s Secunda site, produce mainly industrial gases which are important inputs for Sasol’s coal-to-liquids process, through which liquid fuels are produced, as well as various chemicals processes. The ASUs also produce a small percentage of liquid oxygen and liquid nitrogen, used in Sasol’s operation of the ASUs as well as inputs into Sasol production processes.
In South Africa, the Air Liquide Group supplies similar gases to those produced by the ASUs to various third parties and supplies medical grade gases to several hospitals.
The merger conditions
The merger parties agreed to various conditions following engagements with the Competition Commission and the Department of Trade, Industry and Competition. The Tribunal subsequently assessed the transaction and has approved it, subject to a range of public interest conditions. The public version of the conditions is available on the Tribunal’s website and can be accessed here. The conditions are summarised below:
B-BBEE and preferential procurement
A commitment to enter into a transaction that will promote a greater spread of ownership by introducing B-BBEE shareholding into ALLISA. In addition, where reasonable and practically and technically feasible, procuring from SMMEs and black-owned businesses when upgrading the ASUs. Further, when procuring renewable energy, committing to localisation and transformation i.e., procuring technical services and input material from SMMEs and black-owned enterprises where reasonable and practically and technically feasible.
Employment and skills development
A commitment to no merger-related retrenchments for a two-year period, even though the transaction will not negatively impact employment. In addition, ALLISA will spend approximately R20 million to train and upskill employees transferred from Sasol.
Availability of spare liquid oxygen produced by the ASUs
A commitment to make excess liquid oxygen available to customers in the healthcare sector - prioritizing, on fair and reasonable terms, supply to the public healthcare sector - should surplus liquid oxygen produced by the ASUs meeting the relevant quality specifications become available and should there be an excess demand for and/or a shortage of liquid oxygen in the healthcare sector.
Enterprise and Supplier Development
A commitment to establish a programme/s worth approximately R100 million which is aimed at supporting and developing opportunities for SMMEs and firms owned and controlled by previously disadvantaged persons in ALLISA’s value chain and to make available a specified amount for investment in these programmes within five years of the merger implementation date.
In addition, committing to support the Economic Reconstruction and Recovery Plan tabled by President Cyril Ramaphosa in Parliament in 2020 i.e., ALLISA will contribute, over five years, an additional amount of approximately R100 million to localisation initiatives to drive industrialisation agreed upon by the DTIC and ALLISA with most of the commitment focused on localisation initiatives in value chains core to ALLISA’s expertise including energy, the green economy, industrial infrastructure and machinery.
Carbon emissions reductions
A commitment to substantially reduce the carbon emissions associated with the ASUs within 10 years of the merger implementation date by initiating, amongst other reduction strategies, a renewable energy procurement process aimed at procuring an aggregate amount of up to 900MW of renewable energy which will prioritise procurement of technical services and input material from SMMEs and black-owned enterprises where reasonable and practically and technically feasible. In pursuing this commitment there will be investment into the performance and integrity of the ASUs.
Gillian de Gouveia, Communications Officer
On behalf of the Competition Tribunal of South Africa
Cell: +27 (0) 82 410 1195
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