Competition watchdog recommends Denel-BAE Systems merger

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The South African Competition Commission has recommended the sale of BAE Systems Land Systems South Africa (LSSA) to state owned defence group Denel go ahead as the transaction is not likely to lead to reduced competition.

The Commission met on 2 December and discussed the sale and in a subsequent statement to the media, it said that, “the Commission has recommended to the Competition Tribunal that the merger involving Denel SOC Limited (Denel) and BAE Systems Land Systems South Africa Proprietary Limited (LSSA) be approved without conditions.
“Denel controls various other firms and intends to acquire 100% shares of the LSSA…The Commission found that the transaction is unlikely to lead to a substantial prevention or lessening of competition. The transaction is unlikely to raise public interest concerns.”

In August BAE Systems and Denel signed an agreement to proceed with the sale, valued at R855 million ($79.85 million), which was anticipated to conclude during the fourth quarter of this year after receiving regulatory and other approvals.
“This proposed sale will further shape our portfolio around our core capabilities in tracked, combat and amphibious vehicles and weapon systems, which represent markets where we possess strong franchise positions and discriminating capabilities,” stated Erwin Bieber, president of BAE Systems, Inc.’s Platforms & Services sector.
“We also recognise that the LSSA employees have made a significant contribution to BAE Systems over the last 10 years, and we believe that transitioning ownership to Denel will better position the LSSA business to achieve its full potential working with a strong South African company.”

The transaction includes sale by BAE Systems of its 75% interest in LSSA, as well as sale by DGD Technologies (2001) Proprietary Limited of its 25% stake in LSSA as LSSA is a joint venture between the two companies.

LSSA has comprised three business segments employing approximately 500 people. The LSSA business specialises in the design and manufacture of military tactical-wheeled vehicles, mechanical driveline products, precision-machined components and gears, fire directing systems, and remote weapon launching platforms, subsystems and products.



LSSA already works with Denel, supplying commander and gunner sights for the Badger 8×8 infantry fighting vehicle being developed by Denel Land Systems for the South African Army.