Companies and Deals Imperial Logistics set to be delisted from the JSE on March 15

Imperial Logistics is set to be delisted from the JSE on March 15.

This follows the Competition Tribunal last week conditionally approving the proposed acquisition of Imperial Logistics by global supply chain solutions provider DP World, which is ultimately controlled by the Dubai government, for an estimated R12.7 billion.

DP World and Imperial Logistics have confirmed that all the scheme conditions precedent to acquire a 100% stake in Imperial Logistics, including regulatory approvals, have now been fulfilled.

The companies said the transaction is now unconditional and will be implemented on March 14 2022.

Imperial Group CEO Mohammed Akoojee said they are excited about concluding this transaction, which will be value-enhancing for the group’s people, clients and principals, for its service offering across the markets the group serves, and for its other key stakeholders.

Akoojee said they will all benefit from DP World’s leading technology, capabilities, global networks, scale and key trade-lane volumes, while enabling Imperial Logistics to build on its ‘Gateway to Africa’ strategy and growth ambitions.

“Combining DP World’s world-class infrastructure, specifically its investment and expertise in ports on the African continent, with Imperial’s logistics and market access platforms will enable us to offer integrated end-to-end solutions along key trade lanes into and out of Africa, also driving greater supply chain efficiencies, and ultimately enhancing value for all stakeholders,” he said.

DP World Group Chairman and CEO Sultan Ahmed Bin Sulayem said they are excited to conclude our acquisition of Imperial, which has a significant presence in Africa, a market where trade is expected to grow at more than twice GDP driven by population growth, accelerated urbanisation and rising middle classes.

“Imperial’s capabilities in market access and logistics and its extensive African and European footprint will complement and enhance our growth aspirations.

“DP World is a business that also focuses on empowering and employing local people in its countries of operation while delivering sustainable and inclusive growth.

“Imperial’s purpose aligns with our approach and we look forward to welcoming Imperial to the DP World family,” he said.

DP World and Imperial Logistics have confirmed that they will on March 3 2022 lodge the application with the JSE for the delisting of Imperial.

The suspension of the listing and trading in the ordinary shares of Imperial Logistics is scheduled to take place at the commencement of trade on March 9 2022.

Ordinary shareholders in Imperial Logistics must be recorded in the Imperial Logistics share register on March 11 2022 to receive the R66 per share scheme consideration, with the accounts of dematerialised scheme participants credited with the scheme consideration on the same date.

In September last year, 86% of Imperial Logistics shareholders voted in favour of the proposed transaction, which involves a cash offer of R66 per share from DP World to acquire all outstanding shares in Imperial.

The offer represents a premium of 39.5% to the Imperial share price on July 7, 2021, the day before the agreement between Imperial and DP World was announced, and a 34.2% premium to the 30-day volume weighted average price of Imperial.

Chronux Research analyst Rowan Goeller said on Thursday the delisting of Imperial Logistics, a long-standing blue chip industrial company, will be a loss to the JSE, although Imperial will obviously not be lost to the South African business world.

Goeller said it is not unexpected that the tribunal has imposed conditions on the transaction, given how the Department of Trade, Industry and Competition (dtic) has recently been looking at anyone who wants to acquire or merge with a South African company.

“Whether DP World accepts those conditions, we will have to see. In some cases it has caused some people to walk away, such as Aton with Murray & Roberts where the tribunal wanted to impose conditions on Aton it was not willing to accept,” said Goeller.

He added that the onerous conditions imposed on the proposed transaction are probably in line with how the dtic has been treating any mergers and acquisition in that it has been imposing conditions to safeguard local employment in particular, and local investment.

The proposed transaction is DP World’s most significant transaction in Africa to date.

DP World also jointly owns the Maputo Port Development Company (MPDC) through a partnership between Mozambican Railway Company (Caminhos de Ferro de Moçambique) and Portus Indico, comprising Grindrod, DP World and local company Mozambique Gestores.

The MPDC owns the Maputo Port concession, which in June 2010 was extended for another 15 years, with an option of an additional 10 years of operations after 2033.

Conditions

The tribunal said on Thursday the proposed transaction is unlikely to substantially prevent or lessen competition in any market in South Africa and has been approved subject to public interest-related conditions.

One of the conditions is the establishment of an employee share ownership programme (ESOP) through which employees in South Africa, excluding top and senior management, will have an effective 5% interest in Imperial Logistics South Africa Group (ILSA), a subsidiary of Imperial.

- A further condition is that no employees may be retrenched as a result of the merger for a period of three years from the merger’s implementation date.

Imperial Logistics reported in August 2020 that it planned to retrench about 1 000 of its employees in SA as part of a restructuring and cost-cutting exercise prompted by the serious financial hit the company took from the Covid-19 lockdowns.

The group at the time said it had about 25 000 employees in South Africa, Africa and its international operations.

Other conditions imposed on the proposed transaction by the tribunal include that Imperial:

- Increase its enterprise and supplier development expenditure in South Africa;

- Increase its expenditure on corporate social responsibility initiatives by not less than 10% a year over and above the current R16.5 million a year;

- Spend an additional R15 million over three years on training and development of black persons;

- Increase its annual procurement expenditure targets for black-owned and black women-owned businesses, qualifying small enterprises and exempted micro-enterprises; and

- Must incur no less than R2.1 billion of capital expenditure in its South African operations during the four-year period to end-June 2025.

The tribunal said that in assessing the proposed merger, it considered submissions by the merger parties, the Competition Commission and the minister of trade, industry and competition.

It said it also considered public interest concerns arising from the merger and the remedies proposed relating to a greater spread of ownership by workers and historically disadvantaged persons (HDPs).

The tribunal said it also sought clarification and enhancements on certain aspects of the proposed conditions before approving the transaction.

Employee ownership

In regard to the ESOP, it said the merged entity must establish the ESOP within 24 months of the merger implementation date and Imperial employees will not be required to pay to participate in the programme.

In addition, the tribunal said the ESOP shareholding should not substitute the existing historically HDP shareholding in ILSA.

The merged entity must also:

- Provide the Competition Commision with the principles it proposes to apply in the ESOP before it is established;

- Consult the commission on these principles; and

- Not implement the ESOP before obtaining the commission’s written approval.

Shares in Imperial Logistics rose and closed at R65.78 on Monday.