EDITORIAL: A fun year ahead for deal making

As 2024 drew to a close, BHP’s six-month “put up or shut up” block on a further bid for Anglo American ended while trade, industry & competition minister Parks Tau signalled he would challenge the competition tribunal’s decision to block Vodacom’s acquisition of a stake in Remgro’s fibre assets.

The two unrelated developments could make for an interesting year for corporate activity in SA. So too will other factors — including whether the surge in confidence sparked by the formation of the government of national unity will translate into renewed appetite for deal-making, and whether lower interest rates and higher JSE valuations will do so too.

The bid for Anglo by the “big Australian” was the transformative mining megadeal that didn’t happen last year. A big question is whether BHP will try again this year — perhaps once Anglo is further along with the radical plan it announced in May to streamline its portfolio. That plan will itself make for significant corporate activity this year. Anglo’s Duncan Wanblad set the group an end-2025 deadline for “substantial completion” of the restructuring, which will see the group unbundle or divest its platinum and diamond businesses and will ultimately leave it focused just on iron ore, copper and fertiliser.

It has already delivered on its promise to sell off its metallurgical coal business and has also sold down its stake in Anglo American Platinum from almost 79% to less than 67%. It is set to unbundle the rest to Anglo shareholders this year. Shedding the controlling stake in De Beers is a bigger challenge, especially given the poor state of the diamond market. But there too this year should bring some clarity on the group’s intentions.

What will happen with Vodacom’s three-year-old R14bn bid for 30% of Maziv, which holds Remgro’s interests in Vumatel and Dark Fibre Africa, could prove even more interesting — and not just for SA’s broadband landscape. Tau’s intervention could signal a fresh approach to the regulation of M&As, one which may diverge from that taken by his predecessor Ebrahim Patel. Patel changed the competition legislation to give the minister clear powers to intervene and to give public interest considerations as much sway as competition considerations in merger regulation.

The competition tribunal has yet to give reasons for its decision to block the deal, but it made that decision even though Tau’s department had argued the deal would be a public interest positive for SA, bringing at least R10bn of investment into broadband infrastructure, particularly for low-income communities. Whether the approach to merger regulation under Tau will be more welcoming of investment, particularly foreign investment, than under Patel will be worth watching this year.

That’s particularly so because investment bankers have reported much interest from foreign investors since the GNU, with the pipeline of deals looking decent. Whether the pipeline will become a reality will depend on a range of factors, including how solid the new government looks, whether the economy starts to show more signs of life, and whether the regulatory environment proves more conducive to deal-making.

While deals involving large JSE-listed companies will be ones to watch in coming months, the ones that could matter most for the economy could be those arising out of Transnet’s opening of its rail network to third-party operators and of private investment to expand Eskom’s transmission network.