COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 09/LM/Feb01
In the large merger between:
Fabvest Investment Holding Limited
and
National Cereal Holdings (Pty) Ltd
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Reasons for the Competition Tribunal’s Decision
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APPROVAL
1. On 15 March 2001 the Competition Tribunal issued a merger clearance certificate
approving the merger between Fabvest Investment Holding Limited and National
Cereal Holdings (Pty) Ltd without conditions in terms of section 16(2)(a). The
reasons for the approval of the merger appear below.
The merger transaction
2. The primary acquiring firm, Fabvest Investment Holdings Limited (“Fabvest”), is
controlled by Fabcos Trust which has a 71% shareholding. Other shareholders of
Fabvest include company staff (14%) and outside shareholders (15%). The
beneficiaries of Fabcos Trust consist of members who are all individuals from
previously disadvantaged communities. Fabvest controls three “shell” companies,
Fabcos Investment Holdings, (a holding company for previously held shares in
the leisure industry), Fabcell and Morse Investments, as well as Faboa, a holding
company for investment in African Truck and Bus.
3. The primary target firm is National Cereal Holdings (Pty) Ltd (“National Cereal
Holdings”). The shareholders of National Cereal Holdings consist of General
Food Holdings as to 36%; the Board of Executors (“BOE”) as to 33%; Fabvest
Investment Holding as to 26% and National Cereal Holdings Employee Incentive
Trust as to 5%.
4. Fabvest Investment Holdings (“Fabvest”) is acquiring the Board of Executors’
(“BOE”) 33% shareholding in National Cereal Holdings (Pty) Ltd. This
acquisition would add to Fabvest’s existing 26% share in National Cereal
Holdings, bringing its total shareholding in the target company to 59%.
5. The merger will be effected by Fabvest’s purchase from BOE of all its Ordinary
Shares, Preference Shares and Claims in the target company.
EVALUATING THE MERGER
The relevant market
f. Fabvest is a Black Economic Empowerment investment company.
The principal activity that it engages in is exercised through its
subsidiary, Africa Truck and Bus, which is involved in providing
and maintaining fire fighting equipment to the Airports Company
of South Africa.
7. National Cereal Holdings conducts its operations in the production, sale and
distribution of cereal based foods for human and animal consumption.
Specifically, it engages in the milling of maize (with products such as Iwisa,
Impala, Nyala, Super Sun and Braai Pap) and wheat milling (with products such
as Snowflake, Wonderbake). It also is involved in the bakery industry ( Blue
Ribbon bakery products and BB bakeries) as well as in valueadded products such
as animal feed (Silgro). Its customers are mainly supermarkets such as Checkers,
Pick n Pay and Makro.
8. Both companies operate within and throughout South Africa.
Impact on competition
9. In view of the fundamentally different business activities of the primary and target
firms, there is no product overlap. None of Fabvest’s subsidiaries conduct similar
or related activities to the target firm. Fabvest seeks to merely increase its
shareholding in National Cereal Holdings to reinforce its commitment to black
economic empowerment
10. BOE conducts its core business activity in the financial arena and this disposal of
its shareholding in National Cereal Holdings will enable it to focus on this core
business.
11. Accordingly, National Cereal Holdings will retain its market position held before
11. Accordingly, National Cereal Holdings will retain its market position held before
the merger and the competitive nature of the industry will not be altered in any
way.
12. The Tribunal therefore endorses the Commission’s view that this merger will not
result in the substantial lessening or prevention of competition in any market.
Public Interest Considerations
13. The merger raises no competitiveness concerns and there are no public interest
considerations which would alter this consideration.
_____________ 19 March 2001
N. Manoim Date
Concurring: D. H. Lewis, P. Maponya