BREAKING:South Africa terminates SAA’s strategic equity partner, Takatso’s deal

  • Takatso allegedly underpaying for an airline

 

Public enterprises minister Pravin Gordhan has announced that SAA’s deal with strategic equity partner Takatso has been terminated, a major setback to one of President Cyril Ramaphosa’s biggest privatisation drives amid pushback from some in the ruling party.

“Late last week there was agreement that by mutual consent this transaction should be terminated as there is no clear path forward,” Gordan said after a cabinet meeting on Wednesday.

He explained that in a post-Covid market, a new valuation on the national carrier’s worth was made and this fell short of Takatso’s R3bn original offer.

“At the end of last year, we had a different economy and a different flying public, and a new evaluation was done. In essence, the business came up with about R1bn valuation and the property was valued about R5bn,” Gordhan said.

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Pravin Gordhan

Speculation was rife that the sale of SAA to the Takatso consortium could be in jeopardy as some government and ANC leaders sought a re-evaluation of the airline’s value on grounds that the group of investors was underpaying for the stake.

The latest development raises questions about the fate of SAA, which tumbled into business rescue in 2019 after years of losses. The withdrawal of Takatso takes away a partner that would have injected R3bn cash over three years to fund its operations in exchange for a 51% stake.

Business Times reported on Sunday there is a push in the cabinet and the ANC to review the deal after concerns that Takatso could be underpaying for an airline that has resumed flying and is opening new routes.

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The deal, had it got over the line, would have been another step forward for Ramaphosa’s structural reform agenda, which has seen his government open floodgates of private investors in power generation, and recently in rail transport. The government had hoped to use the transaction as a model for selling strategic equity stakes in ailing parastatals.

Like most state-owned companies, SAA has been a drain on the fiscus.

Critics of the transaction — which would have been the biggest privatisation effort since the government sold its stake in Telkom more than two decades ago — demanded greater transparency in the deal-making process.

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Uncertainty over the fate of SAA could compound the shortage of alternatives, especially on domestic routes.

This follows a report last week that Safair, which has captured 60% of the domestic air travel market, is under investigation and could be grounded for contravening licence conditions that require a majority of local shareholding

 

Wole Shadare