Kansai accepts conditions on Freeworld buy
JOHANNESBURG (Reuters) - Japan's Kansai Paint
will sell a unit, build a new plant and agree to preserve jobs to secure regulatory approval for its $260 million hostile bid for South Africa's Freeworld Coatings.
South Africa's competition regulator said on Tuesday it attached conditions that include a requirement from Kansai to sell Freeworld's automotive coatings business, which includes its shareholding in a joint venture with U.S. chemical giant DuPont.
"To the extent that the conditions may result in a material adverse change to Freeworld, Kansai has elected to accept such conditions for the purpose of implementing Kansai's offer," the Osaka-based company said.
Other conditions include a freeze on job cuts for the next three years and a call for Kansai to build an auto coatings manufacturing plant in the country.
The Competition Commission also wants it to sell a stake to black investors within two years as part of the government's policy to widen ownership in Africa's biggest economy.
Commissioner Shan Ramburuth said that "collectively, these conditions address any anti-competitive harm that would have resulted from the merger and would ultimately increase South Africa's manufacturing capacity in the paint market."
Freeworld's board, which can appeal the decision, will meet before the end of this week to discuss the decision.
But Kansai, which effectively owns 90 percent of Freeworld, said it would implement the deal immediately and pay Freeworld's shareholders the offered 12 rand per share within seven calendar days.
The deal gives Kansai, one of the world's largest paint firms, a substantial presence in South Africa and paves the way for expansion in the African continent.
"Kansai views Freeworld as a platform for further development in South Africa and Africa," its chairman Shoju Kobayashi said in a statement.
With a moribund economy and aging population at home, many Japanese firms, which have historically focused on emerging markets in Asia, are anxious to find new growth overseas.
(Editing by Will Waterman)