Cape Town - While the merger between two Agri business companies has been welcomed, the Food and Allied Workers’ Union (Fawu) said it was “generally cautious” about mergers in the sector.
This comes after the Competition Tribunal announced the successful merger, with conditions, between VKB Beleggings (Pty) Ltd (VKB) and Griekwaland Wes Korporatief Limited (GWK).
Their activities include grain storage and handling, grain trade and procurement, grain milling, trade retail and agricultural finance businesses.
According to the tribunal, the merger would protect jobs and promote the greater spread of ownership and would also enable historically disadvantaged persons (HDP) or farmers and entities to enter into agricultural markets which the merging parties form part of.
Tribunal spokesperson Gillian de Gouveia said: “The tribunal concluded that the proposed merger is unlikely to substantially prevent or lessen competition in any relevant market in South Africa, or to have a negative impact on the public interest.
“However, to remedy concerns regarding the greater spread of ownership, i.e. whether GWK employees would benefit from the pre-existing employee share ownership structure of VKB after the merger, the tribunal approved the transaction subject to... conditions.”
The conditions include a moratorium on retrenchments for employees of both companies for 36 months; and VKB and GWK will ensure that qualifying workers become beneficiaries of the VKB employee share ownership schemes within three months of the implementation of the merger.
The companies were also ordered to facilitate the provision of financing, in terms of their applicable credit policies and relevant legislation, to HDPs in the value chains and the geographical areas where they operate over a 36-month period from the merger implementation date.
Fawu spokesperson Dominique Martin said the conditions attached to the merger lasted only for a certain period.
“Generally we are very cautious about mergers in the agricultural sector seeing that the conditions attached to it normally only last for a certain period... after that, the employer is generally free to retrench.
We have seen many mergers and there are almost always retrenchments. It also causes heavy uncertainty and anxieties among employees about prospective changes in the organisation’s structures, benefits and culture.
“In as far as saving any company from total collapse and subsequently saving jobs, it is perhaps the only viable alternative as per the employer. However, the conditions attached to such a merger must always be heavily scrutinised as most mergers tend to favour the organisation and not necessarily the employees, especially in the long run,” said Martin.
The spokesperson for the merged companies VKB and GWK, Neil de Klerk, said: “Good progress is being made with work to meet the conditions imposed by the Competition Tribunal on the approved merger between the two companies.”
Llewellyn Brooks, Group managing director of the GWK group, had said this was a “significant milestone in the two companies’ history, which was achieved after a lot of hard work over the past two years”.
Agri SA chief executive Christo van der Rheede said they welcomed the merger.
“It will be of great benefit to our farmers. Farmers have seen the input cost rising tremendously and, hopefully through this merger, we can negotiate lower costs for various inputs and that will be of great benefit.”
Cape Times