COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 27/LM/May02
In the large merger between:
Clidet No. 390 (Pty) Ltd
and
Unihold Limited
Reasons for Decision
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APPROVAL
On 29 May 2002 the Competition Tribunal issued a Merger Clearance Certificate
approving the merger between Clidet No. 390 (Pty) Ltd and Unihold Limited in
terms of section 16(2)(a). The reasons for the approval of the merger appear
below.
The Parties
1. The acquiring firm is Clidet No. 390, a special purpose vehicle formed for
the purpose of the instant transaction.
2. The target firm is Unihold Limited, a information technology and
communications services group listed on the JSE and engaged in the
provision of IT services and software systems within South Africa, the UK
and Europe. It also holds various industrial interests.
The Merger Transaction
3. In terms of a scheme of arrangement under section 311 of the Companies
Act 61 of 1973, Clidet, is acquiring a 77.4% shareholding in Unihold. Clidet
will post-merger be controlled by ABSA Bank Li mited (“ABSA”) and Unihold
Shareholders (the “Management Shareholders”).
Rationale for the Transaction
4. The parties advised that due to negative market sentiment in the IT
industry, this transaction will enable the shareholders to realise more value
from their Unihold shares, insofar as they will be able to dispose of their
shares in Unihold at a significant premium to the current market price.
The relevant product market
5. The only market in which there is a marginal overlap is that of outsourced IT
desktop services. ABS A has outsourced the procurement, management,
support and maintenance of its desktop computers and local area network
requirements to AST-DST (AST Group Limited and Distributed Technology
Services) in which it has a 30% stake. In turn, Unihold has a 40% in terest in
SBS, which is also involved in the outsourcing of desktop services.
Impact on competition
6. Although Absa has a significant stake in AS T-DST and will through this
transaction acquire control of Unihold, which in turn has a significant stake
in SBS a competitor of AST -DST, the competition concerns are minimal . In
the first place the combined market shares of AST -DST and SBS in the
overlap market does not exceed 10%. Secondly ABSA does not have
control over AST -DST nor does Un ihold, despite it s 40% stake , have
control over SBS. There is thus little likelihood of ABSA, through its direct
stake in AST -DST and indirect stake in SBS , being able to influence their
competitive behaviour in the market.
Conclusion
The Tribunal endorses the Commission’s finding that this t ransaction will not
substantially lessen or prevent competition in any market. The Tribunal therefore
approves the transaction unconditionally. There are no public interest concerns
which would alter this conclusion.
_____________ 3 June 2002
N. Manoim Date
Concurring: D. H. Lewis , U. Bhoola