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UPDATE 1-South Africa wants Freeworld takeover blocked
March 31, 2011 / 1:10 PM / 7 years ago

UPDATE 1-South Africa wants Freeworld takeover blocked

* Government wants conditions imposed on deal

* Govt says deal to hurt competition in vehicle paint sector

* Kansai prepared to accept “appropriate conditions”

* Freeworld adjourns AGM

(Recasts with Freeworld chairman, Kansai executive)

By Gugulakhe Lourie

JOHANNESBURG, March 31 (Reuters) - South Africa wants the country’s competition watchdog to block the hostile takeover of Freeworld Coatings FWDJ.J by Japanese group Kansai Paint (4613.T).

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) normally requires a minimum free-float of 20 percent, meaning Kansai may have to cut its stake.

U.S. retailer Wal-Mart (WMT.N), which is in the process of buying local retailer Massmart (MSMJ.J), 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)

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