Sasol throws in the towel on Engen deal :: Namibia Internet Gateway cc ::

Articles: Sasol throws in the towel on Engen deal

Posted by admin on Tuesday, March 14, 2006 - 01:51 PM

SA HAD missed an opportunity to create a national fuel champion in the same way the UK had helped create BP, Sasol said yesterday after announcing that it would not appeal against the Competition Tribunal’s outright prohibition of a mooted merger with Engen last month.
Carli Lourens
Sasol insisted that the merger had merit, but said extending the already-protracted process and the uncertainty it had created was “potentially damaging”. This closes the chapter on at least three efforts by Sasol over several years to form the largest fuel company in SA with estimated revenues of R33bn and shares of about 50% and 30% of the fuel production capacity and retail market respectively. It also dashes the hopes of two empowerment consortiums, Afric Energy Resources and Tshwarisano, led by former justice minister Penuell Maduna, to own a quarter of the mooted merged entity, Uhambo Oil, in what would have been the largest empowerment deal in the petroleum sector. The move is a feat, however, for the oil companies, including British Petroleum, Shell, Caltex and Total, which had felt threatened by the proposed merger. The tribunal, which described Sasol as “a maverick, a lone and hungry … wolf”, said in its ruling that the merger would reduce competition and could have negative consequences for the domestic economy. Sasol CE Pat Davies said the lengthy competition process had caused uncertainty among Sasol and Engen employees. The process had already taken about 16 months, he said. Analysts welcomed the decision by Sasol and Engen’s owner Petronas of Malaysia not to appeal, saying it was probably best for Sasol to prevent a potential further clash with government. Finance Minister Trevor Manuel announced during his budget speech that government was considering imposing a tax on the windfall profits Sasol made on the back of high oil prices. One analyst, who did not want to be named, said an appeal could have worsened Sasol’s increasingly negative image, particularly as the tribunal decision was seen as somewhat of a victory for consumers. The market appeared indifferent to the announcement, with Sasol shares closing less than 0,5% higher yesterday at R205.

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