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[2004] ZACAC 5
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Goldfields Ltd v Harmony Gold Mining Company Ltd and Another (43/CAC/Nov04) [2004] ZACAC 5 (26 November 2004)
IN THE COMPETITION APPEAL COURT
In
the matter between
GOLD FIELDS LIMITED Appellant
And
HARMONY GOLD MINING COMPANY
LIMITED 1
st
Respondent
THE COMPETITION COMMISSION
2
nd
Respondent
______________________________________________________________________
JUDGMENT
DAVIS
JP:
Introduction.
Appellant
instituted an application in the Competition Tribunal ('the
Tribunal') in which it sought an order to prevent first respondent
from implementing a merger within the meaning of the Competition Act
89 of 1998 ('the Act').
The
relief sought by appellant was couched in a notice of motion in the
following terms: 'PART A
The applicant
intends to make an application for an order in the following terms:
1.
The applicant is hereby granted leave to bring Part A of this
application as a matter of urgency, and any non-compliance by the
applicant with the forms, time period and service provided for in the
Rules for the Conduct of proceedings in the Competition Tribunal
is
hereby condoned.
2. Pending the final
determination of the application set out in Part C below a temporary
order in the following terms:
2.1. The first
respondent (hereinafter referred to as the "first respondent"
or "Harmony") shall be and is hereby
interdicted and
restrained from implementing a proposed transaction published by the
first respondent on the Stock Exchange News
Service ("SENS")
on 18 October 2003 (the "announcement"), including but not
limited to the taking of any steps
designed to achieve the
implementation of, inter alia, that portion of the transaction set
out therein described as the "early
settlement offer"
(hereinafter referred to as the "early settlement offer" or
the "transaction").
2.2.
The first respondent shall be and is hereby interdicted and
restrained from accepting the tender to it of any Gold Field shares
or otherwise taking transfer of such shares in the share capital of
the applicant as it may have accepted pursuant to the early
settlement offer or otherwise.
2.3. The first
respondent shall be and is hereby interdicted and restrained from
voting, or otherwise exercising any rights attached
to, any shares in
the share capital of the applicant which it may have acquired
pursuant to the early settlement offer or otherwise.
2.4.
The second respondent (hereinafter referred to as the "second
respondent" or "Norilsk") shall be and is
hereby
interdicted and restrained from voting, or otherwise exercising any
rights attached to, any shares in the share capital
of the applicant
which it may hold, insofar as such votes are exercised in respect of
or in connection with or such other rights
pertain to any aspect of
the transaction proposed to be implemented between the applicant and
IAMGold Corporation Inc, a company
registered and incorporated in
accordance with the laws of Canada ("IAMGOLD"), the details
of which were notified to
shareholders of the applicant on 11 August
2004 (the "IAMGold" transaction").
3.
The cost of this part A of the application be costs in part C, the
main application.
4. Granting the
applicant such further and/or alternative relief as this Honourable
Tribunal deems fit.
PART
B
The
applicants intend to make application for an order in the following
terms:
5. The applicant
is hereby granted leave to bring Part B of this application as a
matter of urgency, and any non-compliance by the
applicant with the
forms, time periods and service provided for in the Rules for the
Conduct of Proceedings in the Competition
Tribunal is hereby
condoned.
6. That service of
this Notice of Motion be effected on:
6.1. Each of the
shareholders of the applicant as reflected in the applicant's
register of members; and
6.2. Those persons
named by the Central Securities Depositary Participants ("CSDPs")
administering the sub-registers of
the applicant being the beneficial
holders of shares in the applicant, as reflected in the records of
the CSDPS, (collectively
the "applicant's shareholders") by
publication of this order and the Notice of Motion, within 7 (seven)
days of the date
of this order, in each of the Business Day, the
Government Gazette, the Sunday Times, Rapport and Die Beeld.
7. That a copy of
this Notice of Motion and the applicant's founding affidavit
(together with the annexures thereto) shall be available,
during
normal business hours, prior to the hearing of the above Honourable
Tribunal for the application in Part C hereof at the
offices of the
applicant's legal advisers, Edward Nathan and Friedland (Pty) Ltd (at
the address reflected in Part A of this Notice
of Motion). Further
that, if requested, copies of such documents may be obtained, free of
charge, on request, from the above named
address.
8. That a subpoena, in terms
of the draft subpoena attached to the founding affidavit to this
Notice of Motion be issued.
9. That the costs
of this Part B be costs in the cause of the application for the
relief set out in Part C of this Notice of Motion.
10.
Granting the applicant further
and/or alternative relief.
PART C
The
applicant intends to make an application for an order in the
following terms:
11.
The acceptance by and transfer
of any shares in the share capital of Gold Fields
(whether
pursuant to the early settlement offer or otherwise) to and/or the
exercise of any voting rights attaching to such Gold
Fields' shares
by Harmony prior to the approval by the competition authorities of
the acquisition of 100% of the issued share capital
of Gold Fields
constitutes implementation of a notifiable merger prior to the
approval thereof by the Competition Authorities and,
as such, is
prohibited by the terms of the Competition Act (No 89 of 1998), as
amended ("the
Act").
12.
Alternatively, the early settlement offer (as described in the
announcement (which is attached to the applicant's founding affidavit
marked NH1) constitutes a larger merger, which is required to be
notified to the Competition Commission in terms of the Act.
13.The first respondent,
alternatively the first and second respondents, jointly, are directed
to notify the transaction to the
third respondent as a large merger,
in accordance with the requirements of the Act.
14.Pending
the final approval, if any of the acquisition by Harmony of all of
the shares in the share capital of Gold Fields or
some of the shares
in Gold Fields pursuant to the early settlement offer (with or
without conditions) by the Competition Tribunal
or the Competition
Appeal Court in terms of the Act:
14.1.
The first respondent (hereinafter referred to as the "first
respondent" or "Harmony") shall be and is
hereby
interdicted and restrained from implementing a proposed transaction
published by the first respondent on the Stock Exchange
News Service
("SENS") on 18 October 2004 ("the announcement"),
including but not limited to any steps designed
to the implementation
of, inter alia, that portion of the transaction set out therein
described as "the early settlement offer"
(hereinafter
referred to as "the early settlement offer" or the
"transaction").
14.2. The first respondent
shall be and is hereby interdicted and restrained from accepting the
tender to it of any Gold Fields
shares or otherwise taking transfer
of such shares in the share capital of the applicants it may have
accepted to the early settlement
offer or otherwise.
14.3. The first
respondent shall be and is hereby interdicted and restrained from
voting, or otherwise exercising any rights attached
to, any shares in
the share capital of the applicant which it may have acquired
pursuant to the early settlement offer or otherwise.
14.4. The second
respondent (hereinafter referred to as the "second respondent"
or "Norilsk") shall be and is
hereby interdicted and
restrained from voting, or otherwise exercising any rights attached
to, any shares in the share capital
of the applicant which it may
hold, insofar as such votes are exercised in respect of or in
connection with or such other rights
pertain to any aspect of the
transaction proposed to be implemented between the applicant and
IAMGold Corporation Inc, a company
registered and incorporated in
accordance with the laws of Canada ("IAMGold"), the details
of which were notified to
shareholders of the applicant on 11 August
2004 ("the IAMGold transaction").
15.
The cost of this application, including the costs of the application
set out in Parts A and B above, shall be paid jointly and
severally
by the first respondent, and by such other respondents as oppose this
application, the one paying the others to be absolved.
16.
Granting the applicant such further and/or alternative relief as this
Honourable Tribunal deems fit.'
On
18 November 2004 the Tribunal dismissed the application. It is
against this decision that appellant has appealed to this Court.
The Factual Background.
The
facts can be briefly summarized thus:
In
March 2004 Norimet Ltd, the wholly owned subsidiary of Norilsk,
acquired 20,03% shareholding in appellant. On 11 August 2004
appellant announced that it had entered into an agreement with
Canadian mining company, IAMGold Corporation ('IAMGold'). In terms
of
this agreement, appellant and IAMGold agreed to a pooling of
appellant's assets located outside SADC area with the assets of
IAMGold. In consideration for the purchase of these assets, IAMGold
would issue shares to appellant resulting in appellant owning
about
70% of IAMGold. Appellant's board of directors would be required to
put this arrangement to its shareholders for approval
by a simple
majority at a shareholders meeting on 7 December 2004. Norilsk
considered that the proposal would result in a significant
diminution
of value for shareholders as a whole. It conveyed its concerns about
this proposal to appellant's management but to
no avail. Accordingly,
it announced that it would cast votes against the transaction.
On
16 October 2004 first respondent approached appellant's board of
directors with a proposal for a merger between the two companies.
In
terms of this proposal, first respondent would acquire the entire
issued share capital of appellant in exchange for the issue
to
appellant's shareholders of new shares in first respondent.
Appellant's board asked for further particulars but before
these were
forthcoming, on 18 October 2004 first respondent made a public
announcement of its bid for appellant. A circular was
issued on the
same day.
The
offer appears to have been structured in two separate stages. In the
first stage, which first respondent has called the early
settlement
offer, it offers to acquire up to 34,9% of the share capital in
appellant. First respondent will not acquire any more
shares at this
stage and, if more shares are tendered, a pro rating mechanism will
be used to scale back the shares accepted to
this number. The only
conditions attaching to this offer are that certain resolutions are
to be passed at a general meeting of
first respondent. The early
settlement offer was open for acceptance from 20 October 2004 and
closed for acceptance on 26 November
2004. Subsequent to this stage,
the subsequent offer commences the day after the consideration is
settled in respect of the early
settlement offer. According to the
circular this date is set, as being at the earliest, 29 November 2004
but no later than 3 December
2004. The subsequent offer which is open
for acceptance until 4 February 2005 is subject to a number of
conditions, inter alia
that first respondent receives valid
acceptances for over 50% of appellant's entire issued share capital,
the proposed IAMGold
transaction is not implemented for whatever
reason including that the shareholders do not approve it at the
general meeting on
7 December 2004 and that the merger is approved by
the relevant regulatory authorities including the Compe tition
authorities.
The
Tribunal's decision.
When
the matter came before the Tribunal, appellant contended that the
early settlement offer amounted to an acquisition of control
of
appellant which control would be implemented at the general meeting
on 7 December 2004 and would be in contravention of section
13 A of
the
Competition Act. The
essence of the relief sought by appellant
was an interdict to prevent the implementation of the early
settlement offer on the grounds
that the change in control had not
been approved by the relevant Competition authorities. The Tribunal
held, that on a balance
of probabilities, it had not been established
that the two offers formed part of a single offer to acquire control.
It further
found that the early settlement offer alone did not amount
to a change of control nor could it be said, on the basis of the
evidence
placed before the Tribunal, that any arrangement or
undertaking between Norilsk and first respondent established the
existence
of joint control. For these reasons the application was
dismissed.
On
24 November 2004 an appeal against this decision was heard by this
Court. The matter was enrolled on the basis of extreme urgency.
The
appeal was lodged on 18 November 2004. The Court received the record
on Friday 19th November. Appellant's heads were received
at
15h00 on 22 November and respondents' heads at 9.00 a.m. on 23
November 2004. As was made clear to counsel at the hearing the
Court
was not in the position, for obvious reasons given the complexity of
the matter, to deliver a judgment before 26 November
2004 when the
early settlement offer expired. Given the urgency however the
following order was handed down on 26 November 2004:
'Having
read the papers and having heard counsel we make the following order:
1.
Pending the final approval of
the acquisition by Harmony of all of the shares in
the share
capital of Gold Fields or some of the shares in Gold Fields pursuant
to
the early settlement offer (with or without conditions) by the
Competition
Tribunal or the Competition Appeal Court in terms of
the act:
1.1
The first respondent shall be and is hereby interdicted and
restrained from voting or otherwise exercising any rights attached
to, any shares in the share capital of the appellant which it may
have acquired pursuant to the early settlement offer or otherwise.
2.
The first Respondent is ordered
to pay the costs of the appeal which costs include
the cost of two
(2) counsel.'
The
following are the reasons for this order.
Jurisdiction
to grant interdictory relief.
The application brought by
appellant concerns the question as to whether the transaction is
notifiable as being a large merger as
defined in section 12 of the
Act. If it is found to be a large merger, the Tribunal is required to
approve the merger or to prohibit
implementation thereof in terms of
section 16(1) of the Act. Assuming that the proposed transaction in
this case amounts to a large
merger and that the Tribunal is required
to approve thereof, the question arises as to the powers of the
Tribunal in circumstances
where a party intends to implement a large
merger in contravention of the Act, particularly S 13 A thereof.
Section
13 A provides: 'The parties to an intermediate or large merger may
not implement that merger until it has been approved
with or without
conditions, by the Competition Commission in terms of section
14(1)(b), the Competition Tribunal in terms of section
16(2) or the
Competition Appeal Court in terms of section 17.'
Mr
Unterhalter, who appeared together with Mr Wilson on behalf of first
respondent, conceded that the only section which could conceivably
be
employed as a source of the Tribunal's power to grant interim relief
was section 27(1)(d) of the Act which provides that 'the
Competition
Tribunal may make any ruling or order necessary or incidental to the
performance of its functions in terms of this
Act'. According to Mr
Unterhalter, section 49 C of the Act expressly provides for interim
relief but only in respect of an alleged
prohibited practice. There
is no similar provision in respect of mergers. Given this specific
provision, Mr Unterhalter concluded
that the legislature could not be
understood to have created, in addition to this specific provision, a
wide ranging residual power
to grant interim relief which could well
render S 49C redundant.
This
conclusion is not justified by the literal reading of section
27(1)(d) nor does it appear to be a reasonable interpretation
of the
phrase 'necessary or incidental' to the powers of the Tribunal in the
case of a merger. For example, if a party threatens
to implement a
large merger in contravention of section 13 A of the Act, as Mr Fine
who appeared together with Mr Maenetje on behalf
of third respondent
noted, it would be counter productive and cost ineffective were the
Tribunal to determine that a merger had
taken place, prohibit such
merger but then be unable to give effect to that order because of the
absence of a provision empowering
it to grant interdictory relief.
If, in exercising its merger powers, the Tribunal found that a
proposed transaction constituted
a merger and the parties were intent
on implementation, say before notification, it would be a legislative
curiosity if the Tribunal
did not have the power to grant an
appropriate order to prevent a breach of the Act in circumstances
where the breach was so flagrant.
This implication could never have
been the intention of the legislature.
This
conclusion is supported by the judgment in Seagram Africa (Pty) Ltd v
Stellenbosch Farmers Winery Group Ltd and Others 2001(2)SA
1129 (C).
In this case, applicant applied for an interim interdict to restrain
respondent from implementing a large merger until
approval had been
obtained in terms of the Act. The application was brought their
application before the High Court rather than
before the Tribunal.
Jali J held that the High Court had no jurisdiction to grant such
interdict. He held that the Tribunal had
jurisdiction to grant the
relief sought by the applicants for
'there is nothing which
prohibits a party which has been aggrieved by the action of another
party to approach the Tribunal of the
Court to move an application
for an interdict. Section 27(1)(c) of the Act gives the Tribunal the
right to 'adjudicate in relation
to any conduct wherever in terms of
chap 2 or 3'. The duty given to the Tribunal to adjudicate does not
exclude the duty to grant
an interdict. The question is what conduct
is prohibited in terms of chapter 3 as contemplated in this section?
I am of the view
that as chap 3 deals with mergers, conduct which
could be prohibited in terms of chap 3 would, amongst others, be an
attempt to
proceed with a merger without notifying the commission in
terms of s 13, when a merger falls squarely within the definition of
the merger defined in s 12. If that is the case, then any aggrieved
party would be entitled to approach the Tribunal to move such
an
application. In my view, the absence of a clear position in the Act
so that the Tribunal can grant interdicts is not a shortcoming
as the
applicants contended.' (at 1140 G-J).
The
test as to the existence of 'necessary implication' was set out in
Rennie NO v Gordon & Another NNO 1998(1) SA (A) at 22
F as
follows: 'the implication is a necessary one in the sense that
without it effect cannot be given to the statute as it stands'
In the
present case, the reading suggested by first respondent would render
the Tribunal powerless to prevent a violation of the
Act. In certain
cases the conduct could be penalized later in terms of the
divestiture provision, S. 60, but in others a violating
party would
be able to win a war of position with impunity. In my view, the
reading of the Tribunal's powers as set out in Seagram's
case, supra
is correct and is thus dispositive of the jurisdictional issue.
Requireme
nts for Relief
During
the hearing before the Tribunal a considerable debate took place
regarding the nature of the relief being sought by appellant
and in
particular whether the relief sought was final relief or that of an
interim nature. Mr Gauntlett who appeared together with
Mr van der
Nest and Mr Cockrell on behalf of appellant, did not press the issue
of interim relief before this Court. The debate
between the parties
took place on the basis that the application constituted a prayer for
final relief.
The
requirements for a final interdict are trite law. They are:
a)
A clear right on the part of
applicant;
b)
An injury actually committed or
reasonably apprehended; and
c)
The absence of any other
satisfactory remedy to the applicant. See Setlogelo v Setlogelo
1914
A D 221.
Appellant
contends that the proposed transaction is a merger that first
respondent intends to implement in contravention of section
13 A(1)
of the Act. If the merger would have to be implemented without
approval, Mr Gauntlett submitted that appellant itself,
as the target
firm, would have also contravened the Act.
In
order to analyse whether the proposed transaction contravened section
13 A(2) of the Act, a number of issues require analysis
namely
d)
was there an obligation on the
part of first respondent to notify the Competition Commission of the
transaction in terms of section
13 A(1);
e)
Has there been a proposed merger
in the present case; and
f)
when does section 13 A(3)
namely the provision which prohibits parties to a large merger from
imp lementing that merger until approval
has been given by the
Competition Authorities.
Notification
of the Merger.
Mr
Unterhalter conceded that there was an obligation in terms of section
13 A(1) read with section 13 A(3) for first respondent
to notify and
obtain approval of its proposed merger before the merger was
implemented. That conclusion clearly followed from the
definition of
large mergers in section 11 of the Act which provides that 'for
purposes of
this Chapter..... a large
merger means a merger or
proposed merger
with a value at or
above
the higher threshold established in terms of sub-section (1)(a)' (my
emphasis). First respondent's argument turned on two
related issues,
namely the time at which first respondent was so obligated to notify
and that, at best for appellant, that obligation
commenced after
completion of the early settlement offer.
Once
a party proposes a large merger, it must notify the Commission of
that merger in the prescribed time and form. From the definition
of
'acquiring firm' and 'target firm' it appears that the notification
in terms of S 13 A(1) is the 'transaction' in terms of which
control
will be acquired. This interpretation gives proper meaning to the pre
notification procedure, a point acknowledged by the
Tribunal in
Bulmer SA (Pry) Ltd and Another v Distillers Corporation SA (Pty) Ltd
(Case 94/FN/ Nov.00) at p.17: 'Notification is
intended to be as
extensive as possible; hence the breadth of the language in section
12. Once a transaction presents the essential
features of a merger it
is notifiable. If this were not the case, there would be a danger
that mergers that might have adverse
effects might go undetected
because the jurisdictional barriers in terms of section 12, had been
set too
high.'
The
implication of this procedure is, not that the party cannot continue
with its proposal, to effect a merger but that it will
be prohibited
in terms of section 13 A from implementing the merger until the
latter has been approved.
Has
there been a proposed Merger?
The
question then arises as to whether, on the facts, there was a
proposal to implement a transaction that, when so implemented,
will
involve the acquisition of control by first respondent either on its
own or with another party over the whole or part of the
bus iness of
appellant. If the answer is positive, then, on the basis of S 13 A(1)
there is an obligation to notify.
Appellant
contends that as from 18 October 2004, it was clear that first
respondent was intent on effecting a merger between itself
and
appellant. The press releases and correspondence generated by first
respondent are critical to an evaluation of this submission.
I shall
cite three of the key documents.
On18
October 2004 the following announcement was published by the JSE News
Service:
'Announcement
regarding a potential merger between Harmony and Gold Fields
Limited
(Gold Fields)
1.Introduction.
The board of Harmony hereby
announces the terms of a proposed merger between Harmony and Gold
Fields (the proposed merger), under
which Harmony proposes to acquire
the entire issued share capital of Gold Fields in exchange for the
issue to Gold Fields shareholders
of new shares in Harmony.
Harmony
has conveyed the terms of the proposed merger to the board of Gold
Fields and is hopeful that the proposed merger will be
recommended by
the directors of Gold Fields. However, in view of the proposed
transaction between Gold Fields and IAMGold Corporation
(the proposed
IAMGold transaction), which Harmony considers to be contrary to the
best interests of Gold Fields shareholders, Harmony
believes that
Gold Fields shareholders should be afforded the opportunity to decide
on the merits of the proposed merger at the
earliest opportunity. To
this end, Harmony will shortly post to Gold Fields shareholders an
offer document containing the detailed
terms and conditions of the
proposed merger.
The proposed merger is
conditional, inter alia, on the proposed IAMGold transaction not
proceeding and the approval of the proposed
merger by Harmony
shareholders.
The
proposed merger will be implemented in accordance with the rules of
the Securities Regulation Panel (SRP) and the US Securities
and
Exchange Commission (SEC). 4.Structure of the proposed merger.
Harmony has designed a
mechanism to allow Gold Fields shareholders to realize, within as
short a time period as reasonably practicable,
the benefit of the
premium inherent within the proposed merger. However, in order to
allow all Gold Fields shareholders to benefit
from this mechanism,
Harmony must comply with the regulatory requirements in the United
States of America (US). As a result,
the
proposed
merger is to be structured as two immediately consecutive offers,
each
subject
to the respective conditions precedent set out in paragraph 13.
Through
the making of this announcement, Harmony has irrevocably committed
to
offer to acquire the entire issued share capital of Gold Fields in
the following
manner:
-
early
settlement offer: an initial offer to acquire up to 34.9% of the
entire issued share capital of Gold Fields on the basis set
out
below, not subject to the tender of any minimum number of shares (the
early settlement offer); and
-
subsequent offer: an immediate
follow-on offer on the same terms as the early settlement offer for
the balance of the entire issued
share capital of Gold Fields not
already acquired by Harmony under the early settlement offer (the
subsequent offer). The subsequent
offer will be subject to the
conditions precedent set out in paragraph 13.2'
13.2
With regard to the subsequent offer:
g)
the
passing and, where applicable, registration of the Harmony
resolutions;
h)
Harmony receiving valid
acceptances of the subsequent offer from Gold Fields shareholders in
respect of in excess of 50% of the
entire issued share capital of
Gold Fields (including those Gold Fields shares settled by Harmony
under the early settlement offer
and those Gold Fields shares in
respect of which Norilsk has irrevocably undertaken to accept the
subsequent offer);
i)
The proposed IAMGold
transaction not being implemented for whatever reason including,
inter alia, Gold Fields shareholders failing
to approve the proposed
IAMGold transaction at the Gold Fields general meeting;
j)
The proposed merger being
approved by the South African Competition Authorities under the
Competition Act, 1998 (Act 89 of l998),
as amended;
The registration statement
with respect to the Harmony consideration shares in the US offer
having been declared effective by the
SEC; and
The approval of all
regulatory authorities whose approval is required for the
implementation of the proposed merger.'
On 19 October 2004 Ms Jean
Meijer, the attorney acting on behalf of first respondent, wrote to
the Competition Commission. The letter
was entitled "Application
for permission to file separate notification of the large merger in
terms of section 13 A(1) read
with Rule 28". Ms Meijer writes:
'1.We
act for Harmony Gold Mining Company Limited which has made offers in
terms of section 440 of the Companies Act....to the shareholders
of
Gold Fields Ltd....If successful, the offer will result in Harmony
acquiring in excess of 50% of the entire share capital of
Gold Fields
("the merger") thereby acquiring control as envisaged in
section 12(2)(a)
of the
Competition Act.
2. In
order to comply with USA
regulatory requirements there will be two immediate consecutive
offers. Harmony has irrevocably undertaken
to acquire the entire
share capital of Gold Fields in the following manner -
2.1Early settlement offer - an
initial offer to acquire up to 34.9% of the entire issue share
capital of Gold Fields; and
2.2 Subsequent offer - an
immediate follow-on offer on the same terms as the early settlement
offer for the balance of the issued
share capital of Gold Fields not
already acquired by Harmony under the early settlement offer.'
In
a letter to the shareho lders of appellant on 20 October 2004 first
respondent enclosed 'details of a proposed merger and urged
shareholders to accept the proposed merger with Harmony'. The second
paragraph of the letter of the Chief Executor of first respondent,
Mr
Bernard Swanepoel to appellant's shareholders contains the following
passage: 'Harmony has conveyed the terms of the proposed
merger to
the Board of Directors of Gold Fields and it is hopeful that the
proposed merger will be recommended by the Gold Fields
Board.
However, in view of the proposed disposal by Gold Fields of its
international asset portfolio IAMGold, which Harmony considers
to be
contrary to the best interests of Gold Fields shareholders, Harmony
believes that Gold Fields shall thus be afforded the
opportunity to
decide on the merits of the proposed merger at the earliest
opportunity.'
The
Tribunal adopted the approach that there was no need to notify. It
reasoned thus:
'Whilst
intention may have some evidential value in deciding whether a
transaction is a merger it is by no means decisive of the
issue. A
good many buyers of shares may have ambitions to control a firm one
day and if all purchases were to be notified as mergers
once they
have assumed this intent, any number of people would be jamming the
highways to Pretoria to notify mergers to the Commission.
Intent in
the 'air' does not suffice.
Whilst
Gold Fields' case is perhaps stronger on the mechanics of the
transaction inasmuch as the offer documentation purports to
facilitate a smooth passage from the early settlement offer to the
final offer, we nevertheless find that the chain between the
transactions is broken for several reasons and that, accordingly,
control is not effected at this, the first stage. Even if Harmony
receives all of its acceptances at the first stage it does not follow
that the second stage is inevitable. Whilst the second offer
is
automatic, acceptance of it is not, and many things may happen
between now and then, including the possibility of movement in
both
share prices which might lead to arbitrage selling by holders or
opportunistic squeezes for a better offer.' But this conclusion
is
exactly the opposite of what it claims; it has elevated form over
substance. The cumulative weight of the documents cited is
a crystal
clear indication of the value of the transaction - to effect a
merger. This is not about day dreams to control a company,
- the
prospect and substance of first respondent's is publically announced.
Mr
Unterhalter submitted that there was no dispute that the legal
structure initially contemplated by first respondent for its bid
was
an offer which included an early settlement option Only on 15 October
2004 was the bid restructured into two separate and discrete
offers,
being the early settlement offer and the subsequent offer. This
revised structure was adopted in order to comply with the
regulatory
requirements in the
United
States, in terms of which no offer can contain an option which would
allow early settlement of some shares before all the
conditions of
the offer were satisfied. The reason why 34,9% of the shares was set
as the maximum percentage of shares that would
be subject to the
early settlement offer was because the mandatory offer requirements
of the Securities Regulation code on Takeover
and Mergers (SRC) are
triggered when 35% or more of the company's shares are acquired.
Thus
the transaction might well have been structured to comply with the
regulatory requirements of the United States is one consideration.
That the various announcements and correspondence generated by first
respondent amounted to a proposed merger is a separate issue.
I
did not take Mr Unterhalter to contend to the contrary. His
fundamental objection to the relief sought by appellants turned on
the question as to whether the acquisition by first respondent of
34,9% of the shares of appellant constituted a merger as defined
in s
12 of the Act. In other words, Mr Unterhalter submitted that, even if
the Tribunal had the power to grant intermediate relief
claimed by
appellant, this relief would be premature because it had not made out
a case that the early settlement offer would result
in an acquisition
of control of appellant. In terms of section 12(1)(a) of the Act a
merger occurs when a firm 'acquires or establishes'
control over
another. According to Mr Unterhalter, it is necessary for appellant
to show that the transaction involved the acquisition
or
establishment of control of appellant. If the early settlement offer
did not produce this result, then the transaction could
not
constitute a merger for the purpose of the Act and no relief could be
obtained by appellant.
In
its written heads, appellant adopted the approach that the proposed
transaction involved a single transaction to acquire 100%
of the
shares in appellant. In support of this submission, it referred to
the SENS announcement, the circular and the answering
affidavit of Mr
Grobicki in support of the submission that first respondent had
embarked on a course of conduct, the effect of
which would be to
acquire up to 100% of the shares in appellant. Accordingly, any
attempt to distinguish between the early settlement
offer and the
subsequent offer was irrelevant. On the evidence, first respondent's
contention that there were in fact two discrete
transactions could
not be sustained. In his answering affidavit Mr Grobicki said 'The
early settlement offer and the subsequent
offer are two connected
transactions in Harmony's overall objective to acquire control of
Gold Fields'. In the registration statement
filed at the Securities
Exchange Commission in Washington DC, a copy of which was annexed to
the answering affidavit the following
appeared:
'The
purpose of US offer and the South African offer is to acquire control
of Gold Fields. It was the present intention of Harmony,
as soon as
practicable after the consummation of the US and South African
offers, the further offers described below and the exercise
of the
irrevocable undertaking by Norilsk, to seek maximum representation on
the board of directors of Gold Fields. Harmony also
irrevocably
commenced to launch further offers in the United States and South
Africa for the
remainder of the Gold Fields shares.... During the US offer and the
South
African offer, we will continue to review, on the basis of publicly
available information, the business and operations of
Gold Fields
and evaluate various business strategies and operational
initiatives that we may implement in the event that
we acquire
control of Gold Fields and to the extent we believe them appropriate.
In addition, if and to the extent that we acquire
control of Gold
Fields, or otherwise obtain access to the books and records,
management, employees and other resources of Gold
Fields, we intend
to conduct a detailed review of Gold Fields, business operation,
assets, financial projections, budgets, strategic
and business goals,
legal and governance structures, properties, dividend policy,
capitalization, capital structure, management
and personnel and
consider and determine what, if any, future actions would be
desirable in light of the circumstances that then
exist. For example,
we may, among other things, plan to make changes in Gold Fields
business facility, locations, corporate structure,
capital structure,
boards of directors and/or management, marketing strategies or
dividends policy. If Harmony eventually acquires
the necessary voting
rights then such action is desirable in light of the circumstances
that then exist, Harmony also reserves
the right to merge Gold Fields
into Harmony'.
There
is considerable authority for the proposition that our law examines
the substance of the transaction and 'will not be deceived
by the
form of the transaction: it will render aside the veil in which the
transaction is wrapped and examine its true nature and
substance'
Kilburn v Estate Kilburn
1931 AD 501
and 507. In Dadoo Ltd and Others
v Krugersdorp Municipal Council
1920 AD 530
and 547 Innes CJ stated
'[the] rule is merely a
branch of fundamental doctrine the law regards the substance rather
than the form of things - the doctrine
common, one would think, to
every system of jurisprudence and conveniently expressed in the maxim
plus valet quod agitur quam quod
simulate concipitur'. This approach
followed an earlier judgment of Innes J (as he then was) in Zandburg
v Van Zyl
1910 AD 302
at 309 in which he said: 'The Court must be
satisfied that there is a real intention, definitely ascertainable,
which differs from
the simulated intention. If the parties in fact
mean that a contract shall have effect in accordance with its tenor,
the circumstances,
that the same object might have been obtained in
another way will not necessarily make the arrangement other than it
purports to
be. The enquiry, therefore, is in each case one of fact,
for the right solution of which no general rule can be laid down.'
The
test therefore is not what the contract purports to arrange but
what constitutes the intention of the parties to the agreements
in
question. See Erf 3183/1 Ladysmith (Pty) Ltd and Another v C I R
1996(3) SA 942(A) at 953 B. If as Mr Grobicki contends in his
answering affidavit, the early settlement offer and the subsequent
offer are indeed two connected transactions, and that
first respondent's overall objective was to acquire control of
appellant, then it can be taken that the intention of first
respondent
albeit shaped in two separate elements representive
composite transaction to gain control of appellant.
The persuasive
nature of this argument notwithstanding, appellant's
submissions before this Court concentrated on the effect of the early
settlement
offer.
Initially
appellant's argument was premised on the fact that the early
settlement offer, if successful, would result in first respondent
acquiring 34.9% interest of appellant's shares, thereby gaining
control of appellant. However, at the hearing Mr Gauntlett
concentrated
his
argument exclusively on the effect of the early settlement offer
together with the relationship between first respondent and
Norilsk;
that is whether joint control would be achieved by the two parties
pursuant to the early settlement offer.
This
argument was based on significant part on the undertaking given by
Norilsk to first respondent.
On 16 October 2004 the
following irrevocable undertaking was given to first respondent by
Norilsk:
'2
We currently hold directly and/or indirectly 98 467 758 Gold Fields
shares ('Specified Shares').
3
We hereby irrevocably and unconditionally-
k)
confirm
that we are the beneficial holder of the Specified Shares, are
entitled to exercise all voting rights attaching to the Specified
Shares and are able to transfer unencumbered title in and to the
Specified Shares to Harmony;
l)
undertake, subject to the
provisions of this letter -
m)
not
to dispose of or in any way encumber all or any of the Specified
Shares or grant any right or restriction in connection with
the
Specified Shares;
n)
to vote all of the Specified
Shares against the proposed sale by Gold Fields of its non-South
African aessets to IAMGolf Corporation
('IAMGold');
o)
not to accept the
early settlement offer (as defined in
the Announcement) in respect of
any of the Specified Shares; and
p)
provided that the Proposed
Offer is subject to and made on the same terms and conditions as the
Terms and Conditions, to accept
the subsequent offer (as defined in
the Announcement) in respect of all of the Specified Shares in
accordance with the terms of
the proposed Offer, once the approvals
required from the South African Competition Authorities and the South
African Reserve Bank
and any other required regulatory approvals to
enable the Proposed Offer to be implemented in accordance with its
terms, are granted
without conditions the effect of which would be
materially detrimental to the value of the enlarged group or are
granted subject
to such material conditions which we confirm to
Harmony in writing are acceptable to us, which acceptance shall not
be unreasonably
withheld or delayed.
4 We are advised that Harmony
may wish to implement the Proposed Offer by way of a scheme of
arrangement in terms of section 311
of the Companies Act proposed by
Harmony between Gold Fields and Gold Fields shareholders (other than
Harmony)(('Scheme of Arrangement').
We further hereby irrevocably and
unconditionally undertake, subject to the provisions of this letter,
in such event, to vote all
of the Specified Shares in favour of the
Scheme of Arrangement. Provided Harmony implements the Scheme of
Arrangement on the Terms
and Conditions, it being
acknowledged and accepted that the
mechanics of
such implementation will differ from
the mechanics of the implementation of the Proposed Offer.
5.
The undertakings contained
herein shall remain in full force and effect
until the earliest of
-
q)
20
May 2005;
r)
30 days after the last of
the approvals referred to in paragraph 3.2.4 has been obtained;
s)
the date upon which the
Proposed Offer lapses as a result of the non-fulfilment of any
condition precedent to which the Proposed
Offer is subject; and
t)
the date upon which the
Proposed Offer is withdrawn for any reason.
6.
The undertakings contained
herein will alpse and no longer be of any
further force or effect
if -
u)
the Proposed Offer is not made
on or before 1 November 2004; or
v)
Harmony fails to take all
reasonable steps required to implement the Proposed Offer, including
but not limited to calling a meeting
of shareholders of Harmony,
making any regulatory filings and mailing offer documentation to Gold
Fields shareholders within a
reasonable time period.'
Mr
Gauntlett noted that the undertaking given was to the effect that
Norilsk would not dispose of or encumber its shares in appellant,
it
would vote all of its shares in appellant against IAMGold
transaction, it would not accept first respondent's early settlement
offer and it would accept its subsequent offer in due course.
On
this basis Mr Gauntlett submitted that the acquisition by first
respondent in terms of the early settlement agreement together
with
the irrevocable undertaking provided by Norilsk in respect of its
shareholding of 20,03% would effectively give first respondent
control over 54.93% of the issued share capital of appellant at the
meeting on 7 December 2004 which had been called to vote on
the
proposed sale by appellant of its non South African assets to
IAMGold.
There
are two legal bases relied upon by appellant to support its argument
concerning the effect of the early settlement offer upon
the control
of appellant. In terms of section 12(2)(b), a person controls a firm
if that person is entitled to vote a majority
of the votes that may
be cast in a general meeting of the firm or has the ability to
control the voting of the majority of those
votes, either directly or
through a controlled entity of that person. Secondly, section
12(2)(g) provides that "a person controls
a firm. .if that
person has the ability to materially influence the policy of the firm
in a manner comparable to a person who,
in ordinary commercial
practice, can exercise an element of control referred to in paragraph
(a) to (f)."
In
dealing with the argument that the acquisition of 34,9% of the shares
of appellant together with the irrevocable undertaking
provided by
Norilsk would provide first respondent with control in terms of
section 12(2)(g) the Tribunal concluded:
'Control for purposes of the
Competition Act is
relevant to the controller's ability to effect the
behaviour of the control firm in some firm (sic). For instance
section 12(2)(g)
refers to the fact that one has the ability to
materially influence the policy of the firm. This kind of evidence is
entirely lacking
in the applicant's papers - there is no allegation
of the existence of further agreements or even the fact that they
will have
a common incentive to control jointly. Whilst Gold Fields
is entitled to be incredulous at the discussion between Harmony and
Norilsk
would not have gone further than the agreement on the
undertaking, we must, in the absence of any other evidence accept
respondents
unequivocal version on the facts'.
In
seeking to support this finding, Mr Unterhalter submitted that there
were two elements in the threshold provided in
section 12(2)(g)
; not
only must the person be held to exercise influence over the firm but
that person must be able to do so in the manner of a
controller. Thus
material influence alone is not sufficient to establish control.
Control must amount to decisive influence as
exercised by a
controller of a firm. In this connection, Mr Unterhalter referred to
the EC notice on the Concept of Concentration
under the Merger
Regulations and particularly paragraphs 32 and 35 thereof which
provide
'
Very exceptionally
,
collective action can occur on a de facto basis where
strong
common interests exist
between the minority shareholders
to
the effect that they would not act against each other in exercising
their rights in relation to the joint venture
....
In the absence of strong common
interests.... the
possibility of changing coalitions
between
minority shareholders will normally exclude the assumption of joint
control Where there is
no stable majority in the decision-making
procedure
and the majority can on each occasion be any of the
various combinations possible amongst the minority shareholders, it
cannot be
assumed that the minority shareholders will jointly control
the undertaking.' (my emphasis)
Mr
Unterhalter submitted that the significance of these paragraphs is
that they all involve collective action that produces a lasting
change in the control structure of the firm in question. This would
be the case even in respect of veto rights over specific decisions
which may confer joint control. Accordingly, Mr Unterhalter submitted
that the mere showing of a consistent voting pattern or even
co-operation between shareholders was insufficient to establish joint
control for the purposes of competition law. The common interest
must
be such that the parties will always or at least almost always vote
together on all material decisions.
In
my view, there is no textual basis for distinguishing between short
and long term control particularly when the wording of section
12(2)(g) is carefully considered. This conclusion is well illustrated
by the facts in the present case. It is common cause that
were first
respondent to acquire 34.9% of the shareholding of appellant, it
together with Norilsk pursuant to the latter's irrevocable
undertaking, would be able to defeat IAMGold a motion in favour of
the transaction. This transaction has been presented by appellant
to
its shareholders as being of critical importance to the future of
appellant.
The
rationale for this transaction is set out in a cautionary
announcement of 11 August
2004
thus:
'Gold
Fields has established a significant portfolio of non- SADC assets,
which produced approximately 1.4 million gold equivalent
ounces on an
attributable basis for the financial year ended 30 June 2004. As at
30 June 2003, the attributable proven and probable
reserves for these
assets totalled approximately 11.2 million ounces of gold and the
attributable mineral resources represented
approximately 26.4 million
ounces of gold. Gold Fields believes that the transaction presents an
opportunity to add further high
quality production of approximately
0.4 million ounces per annum through the consolidation of IAMGold's
and Gold Fields' holdings
in Tarkwa and Damang and through the
addition of IAMGold's holdings in Sadiola and Yatela.
Furthermore, the transaction
creates an entity that can compete with international gold companies
on a level playing field. Direct
access to the international capital
and debt markets should enable the company to develop the APP and
(subject to completion of
its acquisition) Cerro Corona projects in
an optimal manner, and to react more swiftly to acquisition
opportunities as they arise.
The injection of Gold Fields' non- SADC
assets into a separately listed, financially independent company
should present an opportunity
for further value creation as the
market benchmarks the assets of GOLD FIELDS INTERNATIONAL against
those of its international
peer group.'
This
announcement makes clear that the IAMGold transaction is critical to
the future of appellant, whatever the outcome of the decision
taken
at the meeting of 7 December
2004.
As
a result of the early settlement offer and the irrevocable
undertaking from Norilsk, first respondent will be able to effect
a
permanent and irreversible change to the very structure of its
competitor; at the very least it will be able to materially interest
a key policy of appellant by ensuring that appellant's long term
strategy of entering into the IAMGold transaction could not be
implemented. That the IAMGold transaction is critical to appellant's
strategy was made clear by Mr Hollard in his founding affidavit:
Gold
Fields' rationale for concluding the IAMGold transaction was that it
would create an entity that is better equipped to compete
with
companies through more direct access to the international
capital
and debt markets,
thus providing the flexibility to respond more
swiftly to acquisition and project development opportunities as they
arise (and
thereby facilitating both organic and acquisition growth
within the merge entity) The effect of this will be the creation of
substantial
additional value for Gold Fields shareholders.
The
early settlement, if implemented, would constitute a large merger
that must be notified in terms of section 13 A (1). For this
reason
the acquisition by first respondent of 34,9% of the issued share
capital of appellant read together with the irrevocable
undertaking
of Norilsk would constitute an assumption of control in terms of
section
12(2)(g)
of the Act.
S
13A(3) and the concept of 'impleme ntation'.
This
conclusion leads to the further question, being the meaning of the
concept of implementation. This concept if best understood
in terms
of the architecture of this part of the Act.
Section
13 A (3) which provides that 'the parties to an intermediate or a
large merger may not implement that merger until it has
been
approved... ' must be read together with section 60(1) of the Act
which provides that 'If a merger is implemented in contravention
of
chapter 3, the Competition Tribunal may -
w)
order a party the merger to sell
his shares, interest or other assets that it has acquired pursuant to
the merger; or
x)
declare void any provision and
agreement to which the merger was subject.
In
this context the Act does not differ significantly from Article 7(1)
of the EC Merger Regulation (No. 131 - 2004 of 20 January
2004) which
provides that: 'A concentration with a Community dimension as defined
in Article 1 which is to be examined by the Commission
pursuant to
Article 4(5), shall not be implemented either before its notification
or until it has been declared compatible with
the common market
pursuant to a decision under Articles 6(1)(b), 8(1) or 8(2) or on the
basis of a presumption according
to
Article 10(6).
Article
7.2 provides that paragraph 1 shall not prevent implementation of a
public bid or of a series of transactions in securities
including
those convertible into other securities
admitted
to trading on a market such as the stock exchange, by which control
within the meaning of Article 3 is acquired from various
sellers
provided that
y)
the concentration is notified to
the Commission pursuant to Article 4 without delay; and
z)
the acquirer does not exercise
the voting rights attached to the securities in question or does so
only to maintain a full value
of its investments based on a
derogation granted by the Commission under paragraph 3.
The
Canadian Competition Act of 1985, on which a number of the provisions
of Chapter 3 of the Act were based, is of some assistance
in dealing
with the interpretation of implementation. Section 114(1) of the
Canadian Act provides inter alia that, 'subject to
this Part, where
(a) a person, or two or more persons pursuant to an agreement or
arrangement, proposed to acquire assets in the
circumstances set out
in sub-section 110 (2), to acquire shares in the circumstances set
out in sub-section 110(3) to acquire an
interest in a combination in
the circumstances set out in sub-section 110(6) the parties to the
proposed merger shall, before the
transaction is completed, notify
the Commissioner that the transaction is proposed and supply the
Commissioner with information
in accordance with this Part.
Section
110of the Canadian Act refers to the acquisition of assets of an
operating business where the aggregate value of those assets
exceed a
certain prescribed threshold. Likewise, section 110(3) refers to the
acquisition of voting shares of a corporation that
carries on an
operating business or controls a corporation that carries on an
operating business where the aggregate value of the
assets of such
business exceed a certain prescribed threshold. Similarly, section
110(6) refers to a proposed acquisition of an
interest in the
combination that carries on an operating business otherwise than
through a corporation (a) where the aggregate
value of the assets
exceeds a certain prescribed limit. This notification to the
Commissioner of Competition is required before
the designated
transaction is completed. In terms of section 100(1), the Competition
Tribunal may issue an interim order forbidding
any person named in
the application from doing any act or thing that appears to the
Tribunal may constitute or be directed towards
the
completion or
implementation
of a proposed merger in respect of which an
application has not been made.. ' (my emphasis)
The
Canadian Act therefore envisages notification before completion of
the merger and provides authority for the award of interim
relief
where a party seeks to complete or implement a proposed merger.
That
the phrase 'may not impleme nt a merger until it has been approved'
as it appears in section 13 A(3) of the Act does not constitute
a
complete or impediment, as does section 100 of the Canadian Act, it
made it clear by the Tribunal's own finding in Anglo American
Holdings Limited v Kumba Resources Ltd (Industrial Development
Corporation intervening)
[2003] 2 CPLR 288
(CC) at para 34 where the
Tribunal said 'Whilst one could not expect firms to notify a merger
where their ability to require control
was at that stage academic it
is not necessary for them to have completed the process of
acquisition as a jurisdictional prerequisite
to notification'. In
short, the process of investigation begins after notification but not
necessarily before the merger has been
completed. What section 13
A(3) seeks to prohibit was not the completion of the merger but any
implementation thereof prior to
authorization having been granted by
the relevant competition authorities.
Were
the early settlement offer to constitute a merger as defined in
section 12 of the Act, first respondent would not be entitled
to
exercise a controlling influence over first appellant pursuant to
this offer without having obtained permission from the competition
authorities to do so. This then leads to the question to whether the
proposed transaction constitutes a proposed merger.
Apprehension
of Harm.
Because the apprehension of
harm was objective and the measure is reasonable apprehension Actual
harm as an outcome need not be
established on the part of balance of
probabilities. See Minister of Law and Order v Nordien 1987(2) SA 894
(A). The harm with
which appellant is clearly concerned in the
present case is the exercise by first respondent of rights attaching
to shares in contravention
of the prohibition against the imple
mentation of a large merger prior to scrutiny by the competition
authorities. In exercising
the rights attached to any shares it might
acquire, first respondent will have the ability to materially
influence the strategic
positioning of appellant. This harm is
exacerbated by virtue of the alternative transaction contemplated by
directors of appellant
which would then have been scuttled by the
actions of first respondent. Mr Unterhalter attempted to counter this
argument by contending
that any application to interdict the
implementation of the early settlement offer could only be brought
after the early settlement
closing date 26 November 2004. That
however can not be an answer to a case which succeeds in showing a
breach of section 13 A(3)
of the Act and where such breach is clearly
and deliberately intended to destroy a critical strategy contemplated
and then recommended
to shareholders by the directors of appellant.
This
aspect of the case raises the particular approach adopted by the
President of the
Tribunal, David
Lewis in his concurring judgment when he writes:
'Previous
decisions of the Tribunal have demonstrated sensitivity to the
prospect of merging parties structuring transactions with
the
specific intent of evading regulatory oversight and, in this way,
undermining the objectives and administration of the Act.
this has
underpinned - appropriately in my view - an expansive view f control,
a perspective endorsed by the Competition Appeal
Court. I believe
that this decision has been approached from this perspective and am
confident that it in no way represents a relaxation
of the Tribunal's
commitment to ensure that the procedures of the Act are respected so
as to enable effective regulation of merger
activity. However I am
also of the view that this transaction has served to highlight a
second danger and that is that the management
of target companies may
well seek to use the provisions of the Competition Act to chill
hostile mergers, in effect to prevent their
own shareholders from
exercising the rights that attach to their share in the ownership of
the company in question. Hostile mergers
- red of tooth and claw
though they may be - are an important part of the very competitive
process that we are mandated to defend
and to promote. I
am, accordingly, confident that this
decision does not fall prey to
entreaties that may be designed to protect incumbent
managers from the wishes of
their owners.' If this carefully articulated approach to Chapter 3 of
the Act was designed to adopt
the purposive interpretation of the Act
there can be no quarrel. The difficulty is that section 2 of the Act
which outlines the
purpose of the Act sets out a number of purposes,
including the promotion of the efficiency, adaptability and
development of the
economy, the provision to consumers of competitive
prices and product choices, the promotion of employment, the
advancement of
the socio economic welfare for all South Africans, the
expansion of opportunities for South African participation in world
markets
and the recognition of the role of foreign competition in the
Republic. Were the concept of hostile mergers to trump these
objectives
of the Act by way of a particular interpretation of
chapter 3, such an approach would jettison the principle of
interpretative
integrity. One objective would destroy a consideration
of the balance of section 2. In any event, great care should be taken
to
ensure that a purposive approach to the interpretation of the Act
engages with the wording of the Act and its overall architecture,
rather than seeking to ignore the latter in order to promote a
particular policy objective which is both contested and
controversial.
Conclusion.
Were
first respondent to exercise its voting rights in terms of shares
acquired pursuant to the proposed notifiable merger, it could
effect
a significant restructure of appellant. Were this to occur, by means
of first respondent exercising its voting rights, this
effectively
constitutes an implementation of a merger in breach of section 13
A(3). The acquisition of 34,9% of the shareholding
of appellant would
thus empower first respondent to materially influence the strategic
position of appellant and scuttle a significant
transaction
contemplated by the directors of appellant as contained in the
cautionary announcement. The damage effected to appellant
in the
event that the merger was not approved could not probably be
commercially undone. In the circumstances, appellant would
have no
viable remedy available to it.
For
these reasons, the relief contained in the order as at 26 November
2004 was granted.