The Competition Tribunal has approved a merger between two agricultural giants, VKB and BKB, which now have shared ownership in two brand-new structures, AgriFin Holdco and Trade Retail and Fuel.
This, after the VKB and BKB groups announced in October last year that it had concluded a transaction framework agreement. Both agricultural enterprises have been in existence for longer than a century.
Following the Competition Tribunal’s approval, Trade Retail and Fuel will be a new holding company structure for the respective trade retail businesses.
AgriFin will be the home for the respective financial services businesses related to production and seasonal accounts, term loans and other interest-bearing credit lines.
The Competition Tribunal does, however, require that VKB and BKB not share any competitively sensitive information regarding the grain and oilseed storage and their trading activities.
BKB’s fuel business
Furthermore, a transformation initiative should be pursued to restructure BKB’s fuel business with regards to ownership by historically disadvantaged individuals. This should be in line with the Petroleum Products Act (120 of 1977) and the Charter for the South African Petroleum and Liquid Fuels industry.
In a joint release between the VKB and BKB board of directors, it is reiterated that VKB’s incentive rebate programme will remain in place. BKB shall receive its share of the profits as dividends which may in turn also be distributed as dividends to BKB shareholders.
Also, the retail and fuel businesses of both VKB and BKB will retain their own staff, and management. These branches will still continue to be producer-focused with the objective that customer experience and service be enhanced.