COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 19/LM/Mar02
In the large merger between:
Clidet No. 366 (Pty) Ltd
and
Dorbyl Metals Trading, a division of Dorbyl Limited
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Reasons
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Approval
1. On 10 April 2002 we approved the large merger between Clidet
No.366 (Pty) Ltd (Clidet) and Dorbyl Metals Trading (Dorbyl),
division of Dorbyl Limited without conditions. We set out the reasons
for this decision below.
The Transaction
2. The transaction constitutes a management buyout. Clidet is a special
purpose vehicle owned by the DMT Investment Trust, a trust formed
by the management of Dorbyl Metals Trading, and ABSA Limited for
the purposes of acquiring Dorbyl. ABSA provided the finance for this
acquisition.
3. Dorbyl Limited decided to sell Dorbyl because it was perceived not to
form part of Dorbyl’s core business.
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The Relevant Market
4. The target firm, Dorbyl Metals Trading, consists of two trading
divisions, namely, Baldwins Steel and Stalcor. Baldwins Steel
processes and distributes carbon steel from plants in Vanderbijlpark
and Isando. Stalcor distributes stainless steel and aluminium. It has
trading depots or warehouses in Gauteng, Western Cape and
KwazuluNatal.
5. Clidet is a shelf company formed specifically for this deal. The DMT
Investment Trust has been formed specifically to hold the interests of
the management of Dorbyl in Clidet and also has no other business
activities in South Africa. ABSA provides services in retail and
merchant banking, insurance, asset management and private equity
investments.
6. Based on the above information available to it, the Commission in its
report concluded that there is no overlap between the goods and
services supplied by the parties to the merger. However, at the hearing
of the matter, we were informed by the parties that a whollyowned
subsidiary of ABSA, Cutfin Proprietary Limited (Cutfin) has an
indirect minority stake in a company called Abkins Steel, a small
player in the steel industry which the parties claim has a less than one
(1) percent market share. Cutfin’s shareholding in Abkin’s Steel
apparently came about when Cutfin called in security for a loan it had
advanced to Abkin’s Steel Abkin’s Steel was at this stage in
financial difficulty and heavily indebted to Cutfin. According to the
parties, Cutfin is currently in the process of being sold and that
transaction will in due course be notified to the Commission.
Impact on Competition
7. We agree with the Commission that this merger is unlikely to
substantially lessen or prevent competition in any market.
Public Interest Issues
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8. The business is being acquired as a going concern and most of the
employees of Dorbyl will continue to be employed under Clidet post
merger. Five (5) administrative staff will lose their jobs as a direct
result of the merger. NUMSA, the registered trade union for Dorbyl
employees, made no representations with regard to the merger.
Finding
9. The merger between Clidet No.366 (Pty) Ltd (Clidet) and Dorbyl
Metals Trading (Dorbyl), division of Dorbyl Limited, is unlikely to
result in the substantial lessening of competition. There are no
substantial public interest issues resulting from the merger.
___________________ 15 April 2002
N. M. Manoim Date
Concurring: S. Zilwa; D.H.Lewis
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