Gordhan announces that SAA-Takatso deal is off

CAPE TOWN - After almost three years of negotiations, government’s talks with the Takatso Consortium as a private equity partner for South African Airways (SAA) are off.

Public Enterprises Minister Pravin Gordhan made the announcement on the sidelines of Parliament on Wednesday.

He said that in part, this is because SAA's assets are now worth far more than they were during the COVID-19 pandemic when Takatso was selected as the preferred bidder.

The partnership would have seen government sell 51% of its shares in the airline.

Gordhan said that with a public asset, government had to ensure that fair value and the public interest was served.

‘NO MEETING OF MINDS’

SAA will continue to operate as a government-owned entity as the plug is pulled on negotiations.

In 2021, when the aviation industry had taken a massive knock due to the COVID-19 pandemic, government selected the consortium as its preferred equity partner for a 51% stake in the business. But Gordhan said on Wednesday the re-evaluation of assets changed the transaction.

Gordhan says Cabinet was informed on Wednesday afternoon.

The Takatso Consortium was due to inject at least R3 billion into the business. But Gordhan said on Wednesday SAA’s assets could not be sold at their 2021 value of R2.4 billion.

Recent valuations now put the business value at R1 billion, and the property at R5.5 billion.

Negotiations since late last year on the revised valuations had now failed.

“We came to a point that whilst there was a meeting of minds so to speak on some of the issues, there were other issues where there was no meeting of minds.”

Gordhan said this included Takatso paying rent for the use of SAA’s property.

“We must ensure that from a public point of view, there is a fair value given to the transaction.”

Gordhan said while SAA still urgently needed cash, he believes it can continue to operate in its current form for at least another year.