Johannesburg, South Africa – On 12 July 2021, Sasol announced that it had entered into a transaction with Draslovka, a Czech Republic-based specialty chemicals company, for the sale of Sasol’s sodium cyanide business. A key condition precedent to this sale is the Competition Commission’s (Commission) approval of the transaction.
On 26 November 2021, being the final day of the prescribed merger review period, the Commission issued a decision prohibiting the transaction. The Commission based its decision on pricing effects which had been raised and dealt with by the Commission at an earlier stage in the review process. Both Sasol and Draslovka (the parties) had engaged with the Commission throughout the review process and the pricing effects issue was fully evaluated by the Commission during these engagements. The prohibition of the transaction was therefore unexpected.
The parties remain of the conviction that the transaction is in the interest of the cyanide business operations, its employees and importantly, South African customers – given that it is anticipated that Draslovka will contribute to the cyanide business operations and enhance its competitiveness. In this regard, Draslovka is a specialist cyanide producer, with world-leading technology. Its plans for the business include expansion and capital investment, which will bring a number of significant benefits to the country – including significant foreign investment, employment, economic upliftment and long-term stability of supply for the mining industry.
Furthermore, the parties are of the view that the Commission’s decision does not take the full circumstances and the interests of stakeholders and customers properly into account. Notably, the pricing effects issue was raised again only on the day that the decision was due to be issued, and therefore afforded the parties very limited time to engage the Commission. Sasol is considering its options in light of the decision, including a reconsideration before the Competition Tribunal.
Until this matter is resolved, Sasol will continue to manage the business safely to provide stable supply of cyanide to customers; and all employees of the cyanide business will remain Sasol employees.
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