South Africa approves Glencore for buyout of Chevron refinery, other assets

South Africa’s Competition Tribunal (CompComSA) has conditionally approved a proposal by Glencore PLC, Baar, Switzerland, to acquire Chevron Corp.’s majority ownership in Chevron South Africa (Pty.) Ltd., which operates a 110,000-b/d refinery at Milnerton, Cape Town, South Africa, as well as the entirety of Chevon’s interest in downstream assets in Botswana.

Issued quietly in late August, the regulatory approval follows Glencore’s October 2017 bid to purchase a 75% stake in Chevron South Africa as well as 100% ownership interest in Chevron Botswana (Pty.) Ltd. from Off the Shelf Investments Fifty Six (RF) (Pty.) Ltd. (OTS) of Johannesburg following OTS’s previous exercise of its preemptive right to acquire the assets from Chevron (OGJ Online, Oct. 13, 2017).

As per CompComSA’s document, the proposed merger can occur subject to conditions aimed at addressing several public interest concerns, including Glencore’s preservation of jobs post-merger; continuation with Chevron South Africa retirees’ medical aid subsidy; establishment of a development fund focused on, inter alia, development of small businesses and black-owned businesses; continuation of Chevron South Africa’s branded marketer program on terms no less favorable to Chevron South Africa’s branded marketers; funding commitment by OTS of certain rebranding-related costs post-merger; maintenance of a certain level of B-BBEE shareholding in Chevron South Africa post-merger; and commitment to making a large investment to deal with refinery capacity and other related but unidentified matters.

Alongside a stake in the Cape Town refinery—in which OTS presumably will retain its current 25% interest—Glencore’s purchase will include ownership interest in the following Chevron South African and Botswanan assets:

• A finished lubricants blend plant and base oil terminal in Durban, South Africa.

• A broad network of coastal shipping, depots, and pipelines with major crude delivery and storage infrastructure at Saldanha Bay and Cape Town Harbor.

• A total of 820 retail outlets in South Africa as well as another 30 in Botswana.

Valued at $978 million, the deal previously was scheduled to close in mid-2018 pending receipt of all necessary approvals.

A definitive timeframe for when the merger will now take place has yet to be disclosed.

Glencore said upon announcing the proposed transaction that it planned to retain local management teams and workforce members as part of the deal.

Contact Robert Brelsford at [email protected].