Implications of Proposed Takeover of a Major British Mining Company
NSIAD-89-123, Mar 3, 1989
Pursuant to a congressional request, GAO assessed the potential impact of the proposed takeover of a British mining and construction materials company with substantial assets in the United States, by a Luxembourg-based company controlled by South African interests, focusing on the takeover's effect on South Africa's portion of free-world production of gold, platinum, rutile and rutile substitutes, zircon, and monazite.
GAO found that: (1) the targeted firm obtained a preliminary injunction from a U.S. district court, based on the takeover's violation of antitrust laws; (2) the United Kingdom and the Commission of the European Communities had no objections to the takeover, since the acquiring firm formally announced that it would not sell platinum interests to a South-African-controlled interest; (3) the U.S. Committee for Foreign Investment in the United States suspended its investigation of the proposed takeover when the acquisition bid lapsed during the other investigations; and (4) the acquiring firm planned to renew its offer, pending its appeal of the preliminary injunction. GAO also found that the proposed takeover could, if the acquiring firm did not implement its proposed divestments, increase South-African-controlled production of: (1) gold from 47 to 51 percent of world production; (2) rutile and rutile substitutes from 44 to 62 percent of world production; (3) monazite from 2 to 39 percent of world production; and (4) zirconium from 21 to 72 percent of world production. In addition, GAO found that: (1) the proposed takeover would not affect South-African-controlled production of platinum, since the target firm did not produce any; and (2) although limited information was available about South African investment in the United States, 1986 data indicated that South Africa had a cumulative investment in U.S. businesses totalling $68 million.