Shell has confirmed that it intends to divest its shareholding in its South African downstream business. It says it is reviewing the downstream and renewables businesses across all regions and markets.
This confirms weekend reports that the company intends to exit South Africa but was mum on reports of conflict between itself and its BEE partner Thebe Investments.
In a statement, Shell says the decision was not taken lightly. It has committed that it will maintain its brand presence in the divestment process.
"Shell has decided to reshape the downstream portfolio and intends to divest our shareholding in Shell downstream South Africa. Considering SDSAs illustrious history, this decision was not taken lightly. During the divestment process, we will work to preserve Shell downstream South Africas operating capabilities, maintain the Shell brand presence and secure the best possible outcome for our people and customers in South Africa under new ownership," says Pam Ntaka, Shell spokesperson.
Roy Mutooni, portfolio manager at Sanlam investments, says the closure of the refineries could be the reason for Shell to pull out of the country. But also warns that multinationals continually change their strategy and change direction.
"If you look a lot at their disclosure, theyve been retreating away from downstream business globally. Thats the business that they were involved in here in South Africa. I think the refinery closing and their interest has come down. So maybe that is the driver of whats happening with regards to delisting. It's not a pure JSE thing. Weve seen that in all stock market globally. The number of companies being bought out and maybe that is a function of cheap money out there and a risk by private equity companies out there to delist listed companies," says Mutooni.
Their share price is currently down 0. 2%.
