COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 15/LM/Apr03
In the large merger between:
Clidet No. 441 (Pty) Ltd
And
Global Roofing Solutions, a Division of Dorbyl Limited
Reasons for Decision
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APPROVAL
On 14 May 2003 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between Clidet No. 441 (Pty) Ltd and
Global Roofing Solutions, a Division of Dorbyl Limited, in terms of section
16(2)(a). The reasons for the approval of the merger appear below.
The Parties
1. The primary acquiring firm is Clidet No. 441 (Pty) Ltd (“Clidet”), a special
purpose vehicle created to house the investment of the management
consortium. The consortium comprises senior management of GRS and
ABSA Bank Limited through its division, ABSA Corporate and Merchant
Bank (“ACMB”), which will control Clidet. ABSA is a financial institution
providing all types of financial services, including retail and merchant
banking.
2. The primary target firm is Global Roofing Solutions (“GRS”), a wholly
owned subsidiary of Dorbyl Limited. It comprises Brownbuilt Metal
Sections (“BMS”) and HH Robertson (“HHR”), businesses engaged in
manufacturing a range of roofing products. GRS is a public company,
listed on the JSE under the “basic industry’s construction and building
materials list.
The Merger Transaction
3. This transaction is being effected via a management buyout of Dorbyl’s
GRS division in terms of which Clidet will postmerger own GRS. Clidet
will be held as to 55% by GRS Investment Trust (the beneficiaries of
which are the current management of GRSand as to 45% by ABSA Bank
(the Clidet consortium).
4. Control will vest in Clidet’s Board of Directors, comprising the GRS
Investment Trust and ABSA. ABSA will have certain veto rights in the new
entity, as security for its investment.
Rationale for the Transaction
5. Dorbyl is disposing of its roofing business, as part of its restructuring, to
Clidet, which is acquiring the business as a going concern. ABSA is
funding the MBO (debt), at the same time acquiring an equity stake in the
transaction (equity) to protect its investment in Clidet and ensure its loans
are repaid.
The Relevant Market
6. BMS produces roofing products for commercial and industrial use, under a
variety of brand names. These products are increasingly being exported
into the African continent and abroad. Domestically, the majority of GRS’
products are sold to roofing contractors. GRS’ main suppliers are Iscor
and Beckers Paints.
7. The GRS parties stated that there were two identifiable markets, namely
separate roofing and decking markets.
8. ABSA is primarily engaged in the financial services market and holds no
interest or shareholding in other companies operating in similar products
of the target firm.
6.
Impact on competition
9. There is no product overlap since GRS and ABSA operate in different
relevant markets. It is therefore not necessary to provide market shares of
the key players in the roofing products market.
Conclusion
We conclude that the merger will not lead to a substantial lessening of
competition. There are no public interest concerns which would alter this
conclusion. The merger is therefore approved unconditionally.
_____________ 4 June 2003
N. Manoim Date
Concurring: U. Bhoola, P. Maponya
For the merging parties: Cliffe Dekker Attorneys
For the Competition Commission: H. Shozi, S. Nunkoo