Everyone speaks of mergers and acquisitions when it has not been
possible in South Africa for two companies to "merge", in
the true sense of that term.
If you consider the structure of the deal activity more closely,
you will see that merger transactions have involved a sale, either
in the form of a sale of shares or a sale of business. Transactions
of this nature are arranged because our company laws do not provide
for the combination of two companies into one. Under our Companies
Act both the acquiring company and the target company continue to
exist separately, perhaps with the acquiring company becoming the
shareholder of the target company.
A number of changes and potential changes to our company laws
will have an impact on deal structures. In terms of the Corporate
Laws Amendment Act, 2006 which became law at the end of last year,
sections 228 and 38 of the Companies Act have been amended.
