Tribunal approves Off The Shelf deal to acquire a majority stake in Chevron SA
Glencore-backed Off The Shelf Investments 56 has been given the green light to acquire a majority stake in Chevron SA, in a deal that will make it the first majority black-owned and managed oil company in SA.
The Competition Tribunal on Thursday announced it had conditionally approved Off The Shelf’s bid to acquire a 75% stake in the company in a deal valued at almost $1bn.
Off The Shelf is Chevron SA’s empowerment partner. Once the transaction takes place, Off The Shelf, led by Mashudu Ramano, will see its shareholding in Chevron SA increase from 23% to 98%.
Ramano was formerly the chair of Johnnic Communications and Airports Company SA.
Glencore had backed Off The Shelf to bid for the stake with an intention to ultimately purchase the majority shareholding from it. But in a report submitted to the tribunal by the Competition Commission, it said that, while it noted Glencore’s involvement in the matter and its intention to later acquire the stake, "the proposed Glencore transaction will also require competition authorities’ approval".
This would be considered as and when it was filed with the commission, the report said.
Glencore was unsuccessful in its previous bid for the Chevron SA stake, which includes assets such as a 110,000 barrel-a-day refinery, a lubricants plant, 820 petrol stations and oil storage facilities.
Glencore lost out to Hong Kong-based Sinopec, which in March received conditional approval from the tribunal to acquire the Chevron SA stake.
But the global commodities company managed to come back into the fray through its backing of Off The Shelf, which as Chevron SA’s empowerment partner exercised its right of first refusal to the Sinopec bid. Off The Shelf then made its own offer for the Chevron SA stake.
According to the Competition Commission’s report, Glencore acted as Off The Shelf’s technical adviser and provided it with the funding to exercise its pre-emptive right. The conditions for the approval are largely in line with those imposed on Sinopec.
For example, jobs must be preserved and R6bn will be invested to develop Chevron SA’s Western Cape refinery.
Off The Shelf has undertaken to remain at least 90% black-owned for as long as it remains a shareholder in Chevron SA and a development fund of $15m would be established.
Off The Shelf spokesperson Mohale Ralebitso said the company would provide an update on the next steps. Glencore declined to comment.