Tinashe Makichi in Nairobi
NAIROBI, Kenya – Zimbabwe is now in the top four Common Market for Eastern and Southern Africa (COMESA) countries, which recorded the highest number of mergers and acquisitions during the first half of 2018. This development is as a result of recent improved interest by investors in several sectors of the country’s economy.
This ranking comes after the Comesa Competition Commission (CCC) said it received merger notifications worth $17,6 billion for the six months of 2018 from $18,7 billion in 2017.
Leading the pack is Kenya followed by Zambia, Mauritius and Zimbabwe.
CCC mergers and acquisitions manager Willard Mwemba told the CCC Regional Sensitisation Workshop in Nairobi, Kenya that mergers and acquisitions are now the most common form of investment as opposed to greenfield investments the world over.
“Kenya, Zambia, Mauritius and Zimbabwe form the top four Member States receiving the highest number of merger activity since inception. Mergers and acquisitions are now the most common form of investment as opposed to green field investments the world over,” said Mwemba.
Since inception, the Commission has handled more than 175 merger transactions, worth around $92 billion in transaction value.
This corresponds to a turnover of over $73,7 billion derived by the undertakings in the Common Market.
The Commission has received, in total, close to $27,9 million in merger notification fees, of which 50 percent is shared with the affected Member States. In 15 transactions, the Commission attached conditions to the merger approval in order to remedy competition concerns which were likely to arise post-merger.
Mwemba said the Energy sector attracted the highest volume of merger activity in the Common Market, followed by Banking and Financial Services, Insurance, Construction, and Agriculture.
He said worldwide mergers and acquisitions activity exceeded $3 trillion for the fourth consecutive year in 2017, with announced transaction volumes reaching $3,7 trillion.
Cross-border merger and acquisitions remained strong, accounting for 30 percent of total volume, as companies looked for opportunities to innovate core business models and mitigate technology disruption.
He said the volume of withdrawn deals in 2017 was $658 billion, partly reflecting continued pressure from regulators. Example is the collapse in 2016 of the Pfizer/Allergan merger and Halliburton/Baker Hughes Inc valued at $160 billion and $28 billion respectively.
Mwemba added that, from the outset, a competition authority that prides itself in rejecting mergers is not a good competition authority.
“Such an authority is a danger to investment, commerce and indeed integration. This is because mergers in most cases do not raise competition concerns.
“Where they raise competition concerns, these can be addressed by having discussions with the parties to reconstruct the merger or have it approved with undertakings to address the competition concerns. A rejection should only occur where the above fails but this is highly unlikely,” said Mwemba.
Going into the future, Mwemba said the Commission shall continue to engage the media in its merger enforcement activities.
