The US$35 billion takeover of Xstrata Plc has been approved by the South African antitrust regulators. The clearance was issued on the belief that the venture would not raise the prices of coal in the country.
According to the Competition Tribunal based out of Pretoria, South Africa, "The Tribunal found that although the increasing prices of thermal coal supply to the domestic market was a very serious concern, given its effect on electricity prices and indeed on the entire economy, the Glencore-Xstrata merger was unlikely to make the situation worse."
The country's state run power company Eskom Holdings SOC Ltd had withdrawn its intervention on the transaction after finalizing an agreement with both Glencore and Xstrata over coal supplies and prices. While the terms of this tripartite agreement were confidential, it was not a hindrance to the approval despite the criticisms highlighted during a hearing last January from Deputy Commissioner Tembinkosi Bonakale.
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