Saudi giant takes another big step to buy South African company for R23 billion
The potential takeover of Barloworld by a consortium led by Saudi Arabia’s Zahid Group has taken a positive step following concerns of the deal potentially violating US trade laws.
Barloworld is an industrial company focusing on industrial equipment and is the exclusive distributor of Caterpillar construction equipment in Southern Africa.
The company looks set to be acquired by Newco, comprised of Gulf Falcon Holding, a subsidiary of Saudi Arabia’s Zahid Group and Entsha, a company linked to Barloworld CEO Dominic Sewela.
Zahid Group specialises in construction, energy, manufacturing, travel, financial, hospitality, oil and marketing services.
The consortium is offering R120 per ordinary share, which totals R23 billion for the company.
However, Barloworld previously warned that it had submitted an initial notification of Voluntary Self-Disclosure (VSD) to the US Commerce Department’s Bureau of Industry and Security (BIS).
This was linked to apparent export control violations that the group was investigating.
Following delays, the company’s investigation was concluded, and the final narrative was submitted to the BIS on 1 September 2025.
The investigation did not identify any violations of U.S. sanctions by the Company.
However, it did identify apparent violations of U.S. export Control. The group said that it takes this seriously and is addressing it.
However, law firm Dentons did give the group a silver lining.
A Dentons Report concluded that the facts identified in the investigation do not provide a violation of US Sanctions applicable within the statute of limitations.
This relates to VT LLC, Barloworld Mongolia LLC, Barloworld Middle East FZE, VT UK LLC and Barloworld.
In Denton’s view, the information disclosed does not provide a basis for any self-disclosures concerning US Sanctions violations.
Thus, the Standby Offer Condition relating to the receipt of the Final VSD and the Dentons Report by Newco has been fulfilled and marks another step in the transaction.
Other approvals given
The VSD joins a host of other conditions precedent to the offer. The group received unconditional approval from the Botswana Competition and Consumer Authority for the transaction last week.
This adds to the approval from South Africa’s Competition Tribunal.
The standby offer still needs competition approval from COMESA in Angola and Namibia. All relevant filings have been submitted, and the group is working towards getting these approvals done as soon as possible.
For the Standby Offer to become unconditional, it will require competition approvals and the following:
- No Material Adverse Change has occurred by the date all other Standby Offer Conditions have been fulfilled or waived; and
- No Superior Competing Barloworld Proposal has been completed.
If the regulatory approvals are not received by 11 September 2025, the Longstop Date will automatically be extended by three calendar months.
The deal has received pushback from shareholders, with two large shareholders voting against it at a general meeting.
There are concerns over CEO Sewela’s alleged conflict of interest due to his involvement in the consortium. The failure to get majority support from shareholders triggered the Standby Offer.
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