JOHANNESBURG, March 31 (Reuters) – South Africa wants the
country’s competition watchdog to block the hostile takeover of
Freeworld Coatings (FWDJ.J: Quote, Profile, Research, Stock Buzz) by Japanese group Kansai Paint
(4613.T: Quote, Profile, Research, Stock Buzz).
The Department of Trade and Industry said it was worried the
takeover would cut competition, especially in the vehicle paint
sector, and wanted competition authorities to impose conditions.
Nauman Malik, Kansai’s global head of strategy, said in a
statement on Thursday the company might be open to “appropriate
conditions”.
Freeworld shares were flat at 11.50 rand.
Kansai, which owns more than 90 percent of the South African
paint company, is waiting for approval from competition
authorities to complete its takeover. The competition commission
was expected to give a final decision on April 18.
In the meantime, Freeworld adjourned its annual general
meeting until April 28 to await the outcome.
While Freeworld shareholders were expected to vote on the
Kansai deal, the board has been advised this “may constitute
prior implementation of the proposed transaction” and could lead
to substantial fines for it an Kansai.
Freeworld chairman Bobby Godsell said the company would
convene a meeting with Kansai after the commission’s ruling and
before the AGM was resumed, to ensure fullest participation of
all shareholders.
Malik said Kansai was “very disappointed and surprised at
the adjournment of the AGM.” Kansai said last month it planned
to keep Freeworld listed. The Johannesburg Stock Exchange
(JSEJ.J: Quote, Profile, Research, Stock Buzz) normally requires a minimum free-float of 20 percent,
meaning Kansai may have to cut its stake.
U.S. retailer Wal-Mart (WMT.N: Quote, Profile, Research, Stock Buzz), which is in the process of
buying local retailer Massmart (MSMJ.J: Quote, Profile, Research, Stock Buzz), is facing similar
challenges from the DTI, which wants the deal blocked or
subjected to conditions.
(Reporting by Gugulakhe Lourie; Editing by Ed Cropley and Dan
Lalor)