Blocking deals like Burger King sale potentially starves black businesses of realising shareholder value: Busa
The Competition Commission’s blocking of the Burger King sale appears to give rise to unintended consequences, says Business Unity SA (Busa).
According to Busa CEO Cas Coovadia, the decision could have implications for how black investors realise value.
“A 68% black-owned firm took a decision to dispose of an asset — presumably with a view to realising maximum value for shareholders — only to have this commercial decision overturned by the commission.
“The unintended consequences of this include the uncertainty and deal-risk generated, a potential slowdown in investment and merger activity, as well as significant constraints on the ability of black investors to realise value from investments at a time of their choosing. These are constraints not applicable to white investors.
“Assuming the commitments made to invest in the development of new Burger King outlets, increase employment and increase procurement from black suppliers were realised, the commission has implicitly favoured ownership criteria over job creation and growth,” Coovadia said.
The commission recently blocked the sale of Burger King by Grand Parade Investments (GPI) to ECP Africa on the basis of public interest concerns, specifically the lack of black ownership credentials of the buyer.
“While Busa fully supports efforts to transform the economy and broaden ownership, the decision of the commission raises questions around whether this is an appropriate mechanism to advance transformation and promote black ownership in the economy,” Coovadia said.