COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 51/LM/Jul02
In the large merger between:
Standard Bank of South Africa;
Real Equity Trust Primary acquiring Firms
and
Stellenbosch Vineyards Limited Primary Target Firm
Reasons for Decision
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APPROVAL
On 28 August 2002 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between Standard Bank of South Africa Ltd
and Stellenbosch Vineyards Limited in terms of section 16(2)(a). The reasons
for the approval of the merger appear below.
The Parties
1. The acquiring firms are The Standard Bank of South Africa Limited
(“Standard Bank SA”), acting through its Standard Corporate and
Merchant Bank Division (“SCMB”) which provides wholesale banking
services to corporates, foreign banks and international clients; and Real
Equity Trust (“RET”), an investment trust holding various stakes in private
equity investments.
2. The target firm is Stellenbosch Vineyards Limited (“SVL”), a company
engaged in the manufacture, processing, packaging and distributions of
wine products. SVL’s shareholders consist of 180 individual farmers,
cooperatives or family trusts, each holding less than 4.8% of the total
issued share capital.
The Merger Transaction
3. Standard Bank SA and RET are acquiring 37.5% and 25% respectively of
the shares in SVL. The current shareholders will retain the remaining
37.5%.
4. SVL is concurrently in the process of selling additional shares to the
current shareholders (a nonrenouncable rights issue), pro rata to their
shareholdings that, if taken up by all existing shareholders, would result in
the following shareholding structure 1:
Existing shareholders 49.4%
Standard Bank SA 30.4%
RET 20.2%
5. However, it was expected that not all existing shareholders would follow
their rights, thereby altering the shareholding structure. By October 21 st
the following shareholding structure had emerged:
Existing shareholders 45.9%
Standard Bank SA 32.5%
RET 21.6%
Rationale for the Transaction
6. The purpose of the rights offer, in conjunction with the private placement,
is to raise funds, which will be to recapitalise SVL, in order to:
reduce the company’s interestbearing debt; and
take advantage of export opportunities.
The relevant market
7. The acquiring and target firms do not operate in the same relevant market.
8. Standard Bank, in this transaction acting through its Standard Corporate
and Merchant Bank division (SCMB), provides retail, commercial,
investment banking and insurance products and services both
domestically and internationally. Standard Bank has no similar
investments in enterprises that are in the same market as the target firm
(either in wine or the liquor industry in general).
9. RET is an investment trust which enables trust investors to invest in
private equity and equityrelated instruments in South Africa. RET is
owned by 6 companies that are involved in banking, investment or
insurance services, and none of the shareholders owns more than 23.33%
1 Existing shareholders of SVL, will receive rights to subscribe for rights shares in SVL at 25 centrs
per rights share, in the ratio of 62 rights shares for every 100 SVL shares held. Shareholders will be
entitled to apply for rights shares in excess of their entitlement. To the extent that some shareholders do
not follow or do not fully follow their rights, these shares will be allocated to shareholders that have
applied for excess shares on an equitable basis.
of the shares in RET. RET takes only significant minority stakes in its
investments. RET has a diversified investment portfolio and currently has
no investments in businesses that are in the same market as SVL (either
in wine or the liquor industry in general).
10. SVL is engaged in the manufacture, processing, packaging and
distribution of wine products. More specifically, the company makes
premium bottled wines for sale on the South African and various
international markets. SVL has a current market share of 0.4% of the total
wine market, or 4.8% of the high price wine segment.
Effect of transaction on competition
11. Neither Standard Bank nor RET have existing investments in enterprises
that are in the same market as SVL. As the relevant product markets of
the parties not overlap, the transaction will have no effect on competition in
South Africa.
Public Interest
12. The parties submit that there will be no effect on employment in South
Africa as a direct result of the merger. The unions (SASBO, the finance
union, and FAWU, the food and allied workers union) have indicated that
they do not wish to participate as the merger will have no effect on
employment (p.533,534). 2 No other public interest issues were raised by
the parties.
Conclusion
We conclude that the merger will not lead to a substantial lessening of
competition. The Tribunal therefore approves the transaction unconditionally.
There are no public interest concerns which would alter this conclusion.
_____________ 23 October 2002
N. Manoim Date
Concurring: DH Lewis, M. Moerane
2 FAWU had initially served a notice of intention to participate [Form CC 5(1), filed 11 July 2002], but
later (5 August 2002) retracted this intention as there will be no job losses resulting from the merger.
For the merging parties: Cliffe Decker Attorneys
For the Commission: M. Mokwana, Competition Commission