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Botchway, Francis N. --- "Mergers and Acquisitions in Resource Industry: Implications for Africa" [2011] ELECD 407; in Botchway, N. Francis (ed), "Natural Resource Investment and Africa’s Development" (Edward Elgar Publishing, 2011)

Book Title: Natural Resource Investment and Africa’s Development

Editor(s): Botchway, N. Francis

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848446793

Section: Chapter 6

Section Title: Mergers and Acquisitions in Resource Industry: Implications for Africa

Author(s): Botchway, Francis N.

Number of pages: 41

Extract:

6. Mergers and acquisitions in resource
industry: implications for Africa1
Francis N. Botchway

1 INTRODUCTION

After contentious bids to acquire one another in mid-2009, BHP Biliton
and Rio Tinto, both Australia based mining giants, settled for a joint
venture arrangement.2 This came about after an initial effort by Chinese
state-owned Chinalco to partner Rio Tinto failed.3 In June 2009, Xstrata,
a Swiss mining company, made an estimated £41 billion merger overture
to its rival, London and South Africa based Anglo American.4 This was
the second major merger effort from Xstrata in as many months after its
bid to acquire rival Lonmin failed because it could not raise the necessary
finance in the middle of the global financial downturn.5 The South African
government is reluctant to endorse the merger of Xstrata and Anglo
American.6 The reasons cited by the Mining Minister include the impact of
the merger on jobs, competition and the larger South African economy.7
Anglo American itself has rebuffed the offer but Xstrata insists that a
merger of the two will make more than £1 billion in efficiency savings.8 The
underlying philosophies of South African competition law and policy are
efficiency and equity.9 Whereas the latter is more peculiar to South Africa,
given the history of apartheid and so on, efficiency seems to be the corner-
stone of almost all competition regimes.
The question that this chapter confronts is: in what ways do the waves
of mergers and acquisitions ...