COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 01/LM/Jan02
In the large merger between:
ABN AMRO BANK N.V.
and
PAMODZI FOODS (PTY) LIMITED
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Reasons
_______________________________________________________
Approval
1. On 30 January 2002 we approved without conditions the merger between
ABN Amro Bank N.V. (ABN Amro) and Pamodzi Foods (Pty) Limited. The
reasons for our decision appear below.
The Transaction
2. The target firm, Pamodzi Foods (Pty) Limited (Pamodzi), is a wholly
owned subsidiary of Pamodzi Investment Holdings Limited. Both Pamodzi
and Pamodzi Investment Holdings are investment companies. Pamodzi
has an indirect control over Foodcorp (Pty) Limited through a 50,1%
shareholding in Foodcorp Holdings, which is the sole shareholder in
Foodcorp (Pty) Limited. Foodcorp (Pty) Limited is the principal trading
entity and operates in the food sector.
3. ABN Amro, a bank registered in the Netherlands, provides financial
services. Its portfolio of services includes wholesale banking to wholesale
clients; consumer and commercial advice to individuals and mediumsized
businesses and investment and asset management products to private
clients. ABN Amro has subsidiaries throughout the world, including South
Africa.
4. The merger transaction involves a restructuring of the equity in Pamodzi.
ABN Amro holds 365 033 preference shares in Pamodzi which shares
were to be redeemed on 28 April 2001. Pamodzi is not in a position to
redeem these shares. The parties have therefore decided to embark on
this transaction to restructure the equity in Pamodzi in order to facilitate
the settlement of obligations between them. The restructuring of the equity
entails the transfer of 80% of the total issued share capital in Pamodzi to
ABN Amro. ABN will continue to hold the preference shares.
5. According to the parties, the objective of the transaction is to ensure that
Pamodzi derives maximum benefits from its investment in Foodcorp
Holdings. The transaction is also intended to help Pamodzi reach a
position where it can redeem the preference shares and pay all arrear
dividends due to ABN Amro by no later than 28 April 2004.
6. Post the merger, ABN Amro and Pamodzi Investment Holdings Limited
will hold 80% and 20% of the ordinary shares in Pamodzi, respectively. As
a result of the merger, ABN Amro will also acquire an indirect
shareholding of 40,08% in Foodcorp Holdings (Pty) Limited, with Pamodzi
Holdings Limited’s interest therein going down to 10,02%.
Product Markets
7. Pamodzi is an investment company. It is indirectly involved in the food
sector through its interest in Foodcorp (Pty) Limited by virtue of its 50,1%
shareholding in Foodcorp Holdings (Pty) Limited. According to the
information provided by the parties Pamodzi has no interest in the
financial services sector 1.
8. ABN Amro, as mentioned above, provides services in the financial sector.
According to the Commission’ report, ABN Amro and its subsidiaries are
not involved in the food sector.
Impact on Competition
9. According to the information provided by the Commission and the parties,
there is no overlap in the services provided by the merging parties or their
subsidiaries. In the circumstances we find that the merger is unlikely to
subsidiaries. In the circumstances we find that the merger is unlikely to
prevent or lessen competition in any market.
Public Interest Concerns
10. The Commission found that the merger would not raise any significant
1 Pamodzi’s parent company, Pamodzi Investment Holdings Limited, does, however, hold a 9%
shareholding in African Merchant Bank Holdings Limited.
public interest concerns. The merging parties assured the Commission
that no retrenchments will result directly from this merger.
Conclusion
11. The merger between ABN Amro Bank N.V. (ABN Amro) and Pamodzi
Foods (Pty) Limited is approved without conditions.
_____________ 11 February 2002
Norman Manoim Date
Concurring: U Bhoola; DH Lewis