Denel responds to Saudi interest

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Denel has said it is not aware of talks by Saudi Arabia to invest in Denel, but is open to further collaboration with the Middle Eastern country.

On 14 October Denel on its Twitter account stated that it “is not aware of the ‘talks’ that Dr Schwer is referring to. However, Denel would welcome any country that looks at South Africa for procurement of defence material; particularly countries that we enjoy good diplomatic relations with, and we are allowed to sell to by our National Conventional Arms Control Committee.”

This comes after foreign affairs minister Lindiwe Sisulu on 12 October said Saudi Arabia has approached South Africa about taking a stake in struggling state-owned Denel. “There have been overtures by Saudi Arabia to buy a stake in our ailing Denel. I do not know what the outcome of those negotiations will be when it gets to the NCACC (National Conventional Arms Control Committee),” she told a briefing.

Denel said that over 60% of its revenues already come from foreign sales “and the more foreign business we get as Denel or even as South Africa, the better for the growth of the industry as that would support South Africa’s national industrial objectives with regards to high-end manufacturing, skills development, job creation and foreign-currency earnings. Saudi Arabia has been one of the client countries for Denel’s products and solutions for a number of years; and we continue to enjoy a good business relationship with the country, over and above the diplomatic relations.
“With regards to the Saudi Arabian Military Industries (SAMI) Company, as Denel is State Owned, with the Shareholder representative being the Department of Public Enterprises, if SAMI wanted to have any talks it would have to be on a country-to-country basis. We understand they are also State-Owned, so that suggests that the two countries would lead in such talks.
“The South African Government’s regulatory framework dictates this approach in such cases. Denel’s response to any overtures by SAMI, or any potential partner, would therefore be guided by its Board, the DPE and possibly National Treasury among relevant state institutions.”

Saudi Arabian Military Industries’ (SAMI) chief executive Andreas Schwer told Reuters earlier this month that Saudi authorities were in talks about a possible stake in Denel. “We are in discussions with the South African government in order to identify opportunities to set up strategic partnerships which could include an equity investment from our side into Denel. It’s not decided yet, but it’s one option,” he said.

SAMI is in discussions with other South African companies including Paramount. “To make it clear, we are in discussions with all major South African companies, not only Paramount, not only Denel,” Schwer told Reuters.