© Pisit Khambubpha – 123RF
The Competition Commission initially recommended to the Competition Tribunal that it ban the proposed acquisition. As a result, BKSA, Grand Foods Meat Plant and ECP Africa Fund submitted to the Tribunal a request for review and approval of the proposed transaction, subject to revised terms proposed by the parties.
The court approved the transaction on September 17, 2021. This means that ECP, a US-based private equity fund focused on investing in Africa, will acquire Burger King South Africa and Grand Foods Meat Plant – which primarily supplies to Burger King hamburger patties – from Grand Parade.
Conditions to be fulfilled within 5 years
The transaction is subject to the following conditions, which must be fulfilled within 5 years.
Burger King South Africa must:
• Obtain investment of at least R500 million in overall capital expenditure;
• Establish at least 60 new Burger King outlets in South Africa (bringing the total number of Burger King outlets in South Africa to at least 150);
• Increase the number of permanent BKSA employees in South Africa by at least 1,250 historically disadvantaged people
• Increase the total value of all salaries and benefits of the above mentioned 1,250 BKSA employees by at least R 120 million; and
• Improve its rating for the Business and Supplier Development element in its B-BBEE dashboard.
Elimination of the Grand Foods meat plant
Additional merger conditions require Burger King to establish an employee share ownership plan for an effective 5% stake in BKSA.
ECP Africa Fund must also have Grand Foods Meat Plant; and BKSA must enter into a supply agreement with Grand Foods Meat Plant and / or the purchaser of Grand Foods Meat Plant.