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DealMakers - 2021 Annual

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BEE Deal of the Year

Northam Platinum’s acceleration of the Zambezi BEE transaction

The complex deal comprised two inter-conditional components; the acceleration of the maturity of the BEE deal concluded in 2015, four years ahead of the maturity date, and an extended 15-year, 26,5% empowerment transaction to include Northam employees and communities (23%) and historically disadvantaged persons (3,5%) through a new listed empowerment vehicle.

The acceleration of the maturity of the 2015 BEE deal was undertaken in a move to de-risk an adverse market event occurring at maturity date, due to conditions brought about by the COVID-19 pandemic, which would pose a risk to the value created for shareholders. Similarly, the extended BEE deal aimed to prevent a liquidity event by disposing shareholders of Northam shares which, again, would erode value for both Northam shareholders and Zambezi Platinum preference shareholders.

The Zambezi BEE transaction acceleration permanently unlocked and transferred unencumbered value created within Zambezi to its ordinary shareholders, receiving in aggregate c.R10,5bn in cash and Northam shares. The offer consideration paid to holders of the Zambezi preference shares was settled in cash, as opposed to shares, and at a 16% premium to face value, crystalising billions in value for BEE shareholders and resulting in a c.26% reduction in 

The transaction entailed the following steps:

  • Acquisition by Northam of all Zambezi Platinum preference shares (ZPLPs) in issue, not already held by Northam;

  • The settlement by Zambezi of accumulated unpaid dividends accrued to the ZPLPs – using proceeds from a disposal of Northam shares (priced at R160 per share) to Northam;

  • The specific repurchase by Northam of Northam shares held by Zambezi (priced at R152 per share);

  • The cash and share distribution of unencumbered, unrestricted value to BEE shareholders in Zambezi, four years prior to the original maturity date; and

  • The final settlement of the ZPLPs on or before maturity of the Zambezi BEE transaction by Zambezi, and its voluntary winding up.


The extended BEE transaction, valued at c.R33,1bn, will not include the current Zambezi strategic partners. It is to be implemented during 2022/2023 and will entail a vendor-funded subscription of shares. Participation will be by Northam group employees and affected communities, with historically disadvantaged persons participating across the full value chain in the Northam Group.

The extended BEE transaction entailed the following steps:

  • The implementation of the Northam scheme, in terms of which Northam Holdings acquired all Northam scheme shares in a share-for-share transaction;

  • The continuation of the Northam Group’s listing on the JSE through the simultaneous termination of the listing, and the listing of all Northam Platinum Holdings shares;

  • The vendor-funded subscription by Northam’s employees and affected communities of a 23% stake in Northam through special purpose vehicles; and

  • The possible participation of other historically disadvantaged persons through a special purpose vehicle to be listed on the BEE segment of the JSE.


The inter-conditionality of the Zambezi BEE transaction acceleration and the extended BEE transaction required carefully considered implementation of the various components to ensure the fulfilment or waiver of more than 30 inter-connected conditions precedent, allowing for the successive implementation of the Zambezi scheme, the repurchase, the net value distribution and the Northam scheme in accordance with regulatory mandated timelines. The transaction involved 10 material jurisdictions with multiple regulators, the publication of three circulars, two listings and two delistings.

Local Advisers

Financial Advisers: One Capital and Deloitte

Legal Advisers: Webber Wentzel and Cliffe Dekker Hofmeyr

Transactional Support Services: BDO and EY


Northam's issued share capital (increasing to a 29% reduction with the repurchase from Zambezi’s ordinary shareholders), significantly strengthening the position of remaining Northam shareholders by protecting and enhancing shareholder value ahead of the extended transactions.

Comment from the Independent Panel: 

Another clear winner amongst a list of strong finalists. Inasmuch as a lot of the complexity was of the company’s own making, the panel was impressed by the way in which this unfolded, resulting in huge value sharing with participants. This transaction addressed structural overhang issues whilst involving employees and communities going forward, in a way which may yet prove to be the best practice. This deal goes way beyond compliance!

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BEE Pick of the best in alphabetical order

Anheuser-Busch InBev’s SAB Zenzele Kabili BEE transaction

The launch of the new empowerment transaction replaced the previous SAB Zenzele deal which reached a total maturity value of R9,7bn in 2020. SAB planned to unwind the Zenzele scheme that year and launch Zenzele Kabili shortly after, but the onset of the COVID-19 pandemic delayed the process as shareholders were prevented from meeting to vote on pay-outs and reinvestment options.

The new scheme was initially available only to existing Zenzele beneficiaries, including the group’s retail shareholders and the SAB Foundation who were allowed to reinvest a portion (a minimum of 63,5%) or all of their remaining entitlements into the Kabili scheme on listing.  The underlying asset of the new scheme was R5,4bn worth of AB InBev shares, and the subsequent exposure was some three times the cash they put in, due to the vendor funding and loan funding backing their purchases.

Local Advisers

Financial Advisers: Rand Merchant Bank and Standard Bank

Sponsor: Questco

Legal Advisers: Bowmans and ENSafrica

Transactional Support Services: BDO and PwC

Coca-Cola Beverages South Africa’s BEE transaction

In 2014, the Coca-Cola Company, SABMiller and Gutsche Family Investments reached an agreement to combine the bottling operations of their non-alcoholic, ready-to-drink beverages businesses in Southern and East Africa. This led to the creation of Coca-Cola Beverages Africa. In South Africa, the parties’ respective bottling operations were combined to create a new local bottler, Coca-Cola Beverages South Africa (CCBSA). As part of the merger, several commitments were agreed to with the South African regulators, one of these being to increase CCBSA’s black shareholding by May 2021.

Local Advisers

Financial Advisers: Rothschild & Co and Standard Bank

Legal Advisers: Bowmans and Webber Wentzel


This was achieved by the following process. The beneficiaries reinvested a portion of their NAV from SAB Zenzele into SAB Zenzele Kabili. SAB made a 30% equity contribution of R720m to facilitate the participation of a new Employee Share Trust in the new BEE transaction. In addition, shares were discounted to the value of c.R810m, with vendor funding of c.R2,9bn for 10 years.


The empowerment transaction involved a scheme of arrangement, an offer to the public, and the listing of SAB Zenzele Kabili on the BEE segment of the JSE in May 2021. The initial listing price was R40 per share, with a market capitalisation of R4,46bn. The listing not only facilitated liquidity and a broader ownership to other BEE investors; it enabled exposure not just to local operations, as was previously the case, but to the international markets in which the beer maker has a presence.

In May 2020, CCBSA launched its lkageng Employee Share Trust, which offered employees a 5% stake and direct economic participation in the business. The outbreak of the COVID-19 pandemic and the subsequent national lockdown placed the May 2021 deadline at risk. The parties, together with advisers, renegotiated the black ownership condition with various regulatory authorities. A revised black ownership commitment 

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was negotiated on the basis that instead of selling the stake to broad-based black economic empowerment (B-BBEE) investors, the current employee share ownership plan would be upsized and the B-BBEE transaction would be implemented on a cost equivalent basis.

In February 2021, the Department of Trade and Industry and the Competition Tribunal approved the variation request. The updated agreement would result in employees increasing their current holding of c.5% in CCBSA by a further 10% to 15%. As part of the transaction, c 8,000 CCBSA employees received an equal allocation of shares, regardless of staff level or years of service. The company’s external BEE partners hold the remaining 5%, resulting in a B-BBEE ownership of 20%.

The transaction, which closed in March 2021, was fully vendor-funded, not requiring employees to make an upfront investment, and also undertook to create a localisation platform, deepening the level of transformation in the sugar value chain.

Comment from the Independent Panel: 

The panel acknowledged that this was a very good deal, significantly focused on employees, and therefore akin to an ESOP.

Exxaro Resources disposal of Exxaro Coal Central

In early 2021, Exxaro announced its intention to reduce coal emissions across its operations, as part of its strategy to address climate change. As part of its sustainable growth approach, a review of internal operations and projects was undertaken, identifying non-core assets to its future strategic objectives. The divestment of Exxaro Coal Central (ECC), which consists of the Dorstfontein, Forzando and Tumelo operations, was undertaken using selection criteria which included value maximisation, broad-based black ownership, and the sustainability of the new operator to manage the assets. 


In April 2021, an agreement was signed with Overlooked Colliery, a privately held and 100% black-owned mining entity with a strong track record operating three mines in Mpumalanga - Overlooked Colliery, Weltevreden Colliery and Halfgewonnen Colliery. As part of the agreement, Overlooked assumed all of the rehabilitation liabilities of ECC, while Exxaro retained all coal export entitlement through the Richards Bay Coal Terminal.

The ECC sale confirmed Exxaro’s strategic review that the assets had value and would be better placed to extract maximum value from them with a different operator. Overlooked has ambitions to double production from its 2021 level of 2,4Mt to 4,8Mt during 2022.

Numerous regulatory approvals were required, including those from the Competition Commission and the Department of Mineral Resources and Energy, and various funding mechanisms required innovative structuring to ensure the execution of the deal in the most effective and sensible manner.

Local Advisers

Financial Advisers: Absa CIB and Proximity Advisory

Sponsor: Absa CIB and Tamela

Legal Advisers: CMS, Inlexso, Tshisevhe Gwina Ratshimbilani, Werksmans and Herbert Smith Freehills South Africa

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Comment from the Independent Panel: 

Unfortunately, we only got to consider the scheme and the listing of SAB Zenzele for this year’s award, as parts of the overall transaction had already been considered the previous year. A worthy finalist nonetheless.

Comment from the Independent Panel: 

A good transaction where assets were transferred at fair value to more appropriate owners, and where both the seller and the buyer happen to be black-owned businesses. Hope springs for this to be the new norm.

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