On Thursday, South Africa’s Competition Commission announced it had approved a second part of an Independent takeover bid, this time involving two Chinese companies: China International Television Corporation and China-Africa Development Fund.
The Chinese 20% stake will be housed in the tax haven Mauritius.
The news group is being sold for about R2-billion by its debt-laden Irish owner, Independent News and Media PLC.
It houses major titles such as the Cape Times, the Star, Pretoria News, Isolezwe, Sunday Independent and the Mercury.
It was previously disclosed that the South African state-owned Public Investment Corporation (PIC) was buying 25% of the company, using Government Employee Pension Fund money.
The remaining 75% of Independent was to be held by a consortium led by Cape Town businessman Iqbal Surve and his company Sekunjalo Investment Holdings. The Sekunjalo consortium would include a broad-based component and a raft of politically connected people and organisations.
But the Competition Commission on Thursday said this stake was to be reduced to only 55%, to make way for the Chinese.
The commission has also disclosed that the Chinese consortium and the PIC will be making loans to Independent. And previously the commission said PIC was also financing part of the Sekunjalo consortium’s bid.
While the size and terms of these Chinese and PIC loans are not known, they could give the two governments even more than the effective 45% control over Independent.
The PIC already owns large stakes in two major other South African media houses – Times Media Group (19.2%) and Naspers, which owns Media 24 (17.2%).
This raises questions over whether this creeping state-hold over newspaper groups could impact on media independence in South Africa.
The China-Africa Development Fund was launched by president Hu Jintao in 2007 with funding from the China Development Bank. It has invested in numerous African projects, usually in partnership with Chinese state-owned enterprises like its new partner in Independent, China International Television Corporation.
In an earlier statement, the Competition Commission said the Chinese would be given a “controlling” stake in Independent, meaning, in terms of the Competition Act, it could materially influence the company.
However, the PIC would not have such “control” at this stage, the commission said.
But the commission’s conditions for the merger aim to deal with the possibility that the PIC could gain control at a later date. Certain measures needed to be taken, it said, to prevent anticompetitive information flows between the media companies by virtue of PIC’s common ownership.
The commission did not address the potential impact of this PIC control over media independence as this was not a competition law matter.
Aside from a 10% staff shareholding and a broad-based component, the Sekunjalo consortium includes three ANC-allied trade union investment vehicles, a trust linked to the ANC’s Umkhonto weSizwe Military Veterans’ Association, controversial ANC parliamentarian Mandla Mandela, and South African Brics council representative Sandile Zungu, among others.
In its approval, the Competition Commission said that all shareholder and loan agreements must be submitted to it within five days of signing.
The PIC was not available at the time of publishing and Surve said he would comment at the end of the month.
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