Durban – The R5.35 billion sale of Tongaat Hulett’s starch business to Barloworld got the green light after an independent third party, Rothschild & Co, found that no material adverse change (MAC) had occurred due to the Covid-19 pandemic.
The two companies had reached a deadlock on the agreement for the sale of its starch business to Barloworld in May following the Covid-19 outbreak in the country in March.
Barloworld had said it was reasonably likely that the earnings before interest, tax, depreciation and amortisation (Ebitda) of the starch business for the financial year to end March 2021 would be 82.5% or less than the Ebitda of the starch business for the financial year to end March 2020 and that an MAC had, therefore, occurred.
Tongaat chief executive Gavin Hudson said yesterday that the group was pleased that the decision by the independent expert had confirmed Tongaat’s belief that a MAC event had not occurred and that the transaction would now go ahead.
“Throughout this process we have continued to work to close out work streams to meet our other obligations under the agreement reached with Barloworld in February this year, so that we can conclude the sale and move forward. It is expected that we will be able to finalise this process by the end of October with the starch business transferring to Barloworld from November 1,” said Hudson.
Tongaat shares closed 15.24% higher at R6.17 on the JSE yesterday, while Barloworld shares closed at 4.18% lower at R57.57.