AN INTERVIEW WITH HERBERT SMITH FREEHILLS LLP DISCUSSING M&A IN AFRICA

Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes. This interview is taken from the M&A volume featuring discussion and analysis of legal developments, keynote deals as well as an insight into typical transactions within key jurisdictions worldwide.

1. What trends are you seeing in overall activity levels for mergers and acquisitions in your jurisdiction during the past year or so?

Gavin Davies and Rudolph du Plessis: The medium and long-term impact of covid-19, and the effect of lockdown restrictions, on the economies of countries in Africa will probably dominate any discussion about business and M&A activity on the continent for a while. The pandemic has caused a lot of uncertainty, not only about the consequences of the lockdown restrictions on the economy, but also the possibility of a second wave of infections and countries’ ability to cope with infections. At the time of writing, the data seems to suggest a slowdown of covid-19 cases in Africa, but uncertainty remains about the social and economic effects of the pandemic. The uncertainty has definitely had a short-term impact on M&A activity and many transactions were delayed, renegotiated or cancelled. We do, however, expect the crisis to operate as a catalyst for change and, as a result, there will be opportunities for those with capital to invest or a desire to expand. However, we think that M&A will be different. One immediate example of such change will be that the due diligence exercise will have to have an increased focus on certain key areas such as supply chain risk (including force majeure and the possibility of further waves of the pandemic). It will also be important to understand what steps the business has taken in response to the pandemic, (eg, payment of rent) and what activities the target may have undertaken (or carried out differently) during the covid-19 pandemic that could give rise to liability.

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THE YEARS OF ‘COVID CAPTURE’ CALL FOR VIGILANCE

Author: Cameron Dunstan-Smith

Governments and corporates must ensure delivery of vital goods and services to protect citizens and equip state facilities. 

The Covid-19 pandemic is the most challenging global economic disaster the world has witnessed in a generation. The pressure on individuals, governments and corporations is taking its toll, with the impact felt at macro and micro levels.

Unfortunately, as the call goes out for governments, corporate citizens and the person in the street to pull together to fight this pandemic, bad actors inevitably seize opportunities to unlawfully enrich themselves from government and corporate coffers.

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DO’S AND DON’TS FOR E-COMMERCE DELIVERY PERSONNEL, COURIERS AND COURIER COMPANIES

Authors: Rohan Isaacs and Tatum Govender

Although the country is moving to level 3, more and more suppliers had already turned to online or telephonic sales to get their businesses starting up again. This is because these types of sales were largely permitted during level 4, in terms of directions issued on 14 May, and because consumers feel more at ease ordering online rather than shopping in-store. More people have also become accustomed to shopping online. Directions issued by government impose numerous obligations on suppliers, couriers and consumers, which are additional to those already imposed in other laws.

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DO’S AND DON’TS FOR ONLINE AND TELEPHONIC RETAILERS

Authors: Rohan Isaacs and Tatum Govender

Although the country is moving to level 3, more and more suppliers had already turned to online or telephonic sales to get their businesses starting up again. This is because these types of sales were largely permitted during level 4, in terms of directions issued on 14 May, and because consumers feel more at ease ordering online rather than shopping in-store. More people have also become accustomed to shopping online. Directions issued by government impose numerous obligations on suppliers, couriers and consumers, which are additional to those already imposed in other laws.

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DO’S AND DON’TS FOR CUSTOMERS OF ONLINE AND TELEPHONIC RETAILERS

Authors: Rohan Isaacs and Tatum Govender

Although the country is moving to level 3, more and more suppliers had already turned to online or telephonic sales to get their businesses starting up again. This is because these types of sales were largely permitted during level 4, in terms of directions issued on 14 May, and because consumers feel more at ease ordering online rather than shopping in-store. More people have also become accustomed to shopping online. Directions issued by government impose numerous obligations on suppliers, couriers and consumers, which are additional to those already imposed in other laws.

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WEBINAR: POST-COVID-19: RE-IMAGINING THE SUB-SAHARAN AFRICA MINING SECTOR

Thursday 21 May 2020, 15.30 – 16.45 CAT

A lot has been said about the mining industry’s current travails and what mining companies must do to survive. The question remains: what do we do after the lockdown? We find ourselves at another kairos moment in the World’s history – an important crossroads where we are afforded a brief opportunity to reflect on what a post-COVID-19 world should look like.

In this webinar, Patrick Leyden (Director, Herbert Smith Freehills) will moderate the discussion between Peter Leon (Partner and Co-chair of the Africa Practice Group, Herbert Smith Freehills), Olivier Binyingo (Director, Herbert Smith Freehills), Fiona Perrott-Humphrey (Senior Mining Adviser, Rothschild) and Peter Attard Montalto (Director – Global Lead, Capital Markets Research, Intellidex) who will consider what the sub-Saharan Africa mining sector may look once the current lockdown period ends.

They will also indicate what steps sub-Saharan countries should take now to ensure that their mining sectors are placed on the correct trajectory to maximise future growth and development.

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Please register at the above link.

We will then send you an email with a link to join the webinar and confirmation of your log-in address.

If you have queries about the webinars or the registration process please contact webinars@hsf.com.


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This webinar will be recorded so please register and you will automatically receive a link to the recording when it is ready.

All Herbert Smith Freehills webinars are recorded and are available for you to listen to again. Please contact webinars@hsf.com for a full list of archived events.

COVID-19: PRESSURE POINTS: EXACERBATING AFRICAN ECONOMIC INSTABILITY (AFRICA)

Countries in sub-Saharan Africa were dealing with a myriad of economic and other challenges prior to the outbreak of Covid-19 and these will continue to impact on the outlook of countries in the region.

The pandemic will further exacerbate the challenges faced by the region, speakers participating in international legal practice Herbert Smith Freehills’ ‘Sub-Saharan Africa: The dynamics that matter right now’ webinar, on May 14, indicated.

The outlook in light of the Covid-19 pandemic for sub-Saharan Africa was noted as being grim, as is the case for most countries in the world, given the shock to the global economy.

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COVID-19: PRESSURE POINTS: A CONSIDERATION OF FACTORS THAT MAY INFLUENCE MERGER CONTROL INVOLVING DISTRESSED FIRMS FOLLOWING THE COVID-19 PANDEMIC (SOUTH AFRICA)

Authors: Nick Altini, Leana Engelbrecht and Sandhya Foster (with research assistance from Lauren Paxton)

It is clear that the COVID-19 pandemic is already having a far-reaching impact on local, regional and global economies, with many firms facing severe financial constraints due to the limitations and government interventions introduced to tackle the global pandemic.

As humanitarian efforts are, generally, being placed ahead of commercial economic interests some firms are severely impacted by the economic slowdown and it is likely that the financial and economic impact of these interventions will have a long-lasting impact on businesses.

In the wake of this, it is probable that many firms will be placed in a distressed position and will explore merger opportunities as a means of avoiding business rescue, or even liquidation. Similarly, firms with more robust balance sheets will doubtless seek acquisition targets in friendly or hostile takeovers. Consolidation in many sectors is inevitable and will take place through a blend of attrition as a result of the lockdown and mergers where either or both firms seek to merge in order to survive in a far more Spartan market than that which existed before.

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SA’S FATE IS IN ITS OWN HANDS, NOT THE IMF’S

Author: PETER LEON

Short-term relief will not be enough if the government does not jolt the economy into life with breathtaking reforms.

It will be many months before we are able to assess the extent to which the Covid-19 pandemic has damaged the global economy. An unprecedented supply and demand shock has already led to a projected 16% unemployment rate in the US, the world’s biggest economy, with 26-million unemployment claims last week alone. This is four-and-a-half times more than the February 2020 unemployment rate. If this continues, the US unemployment rate will reach levels not seen since the Great Depression in 1934.

The International Monetary Fund (IMF) believes the global economy will contract 3% in 2020 — the worst global recession since the Great Depression. Dramatic reductions in supply and demand, falling commodity prices, outward capital flows and declining global growth all contribute to this. The fragility of many economies is evident, with developing countries suffering from an unhappy combination of a health, financial and fiscal crisis. SA is no exception.

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COVID-19: PRESSURE POINTS: NAVIGATING THE COVID-19 REGULATIONS AND THE ROLE OF COMPETITION LAW IN COMBATTING THE IMPACT OF THE PANDEMIC (SOUTH AFRICA)

Authors: Stewart Payne and Natasha Rachwal, with supervision by Nick Altini and Leana Engelbrecht

Following the declaration of a national state of disaster in terms of the Disaster Management Act No. 57 of 2002 (as amended), the concerning escalation in the number of confirmed COVID-19 infections in South Africa prompted the National Coronavirus Command Council to enforce a nationwide lockdown for 21 days which came into effect from midnight on Thursday, 26 March 2020.

These developments have been accompanied by the expedited publication of numerous regulations aimed at combatting the outbreak of COVID-19 and mitigating its anticipated impact on the already strained economy. In particular, emphasis has been placed on enabling both the public and private sectors to act swiftly in responding to the healthcare crisis.

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