COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 17/LM/Apr03
In the large merger between:
Trufit (Pty) Ltd
and
Cobra Group (Pty) Ltd
Reasons for Decision
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Approval
1. On 4 June 2003 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between Trufit (Pty) Ltd (“Trufit”) and
Cobra Group (Pty) Ltd (“Cobra”) in terms of section 16(2)(a). The reasons
for the approval of the merger appear below.
The Transaction
2. This transaction entails a sale of the business of the Cobra Group,
including the sale of the entire issued share capital of the subsidiaries,
Cobra Brands and Caslead.
3. It is envisaged that pursuant to the transaction Trufit will amend its name
to “Cobra Watertech” and continue the business of Cobra.
The Parties
4. The primary acquiring firm is Trufit, a special purpose company. The
majority shareholders of Trufit are Ethos Private Equity Fund IV (“Ethos
IV”) and Delta Group Limited, a subsidiary of Delta Plc (“Delta”). The
remaining shares are held by management.
5. The primary target firm is the
Cobra Group (Pty) Ltd, wholly
owned by Cobra Investments
(Pty) Ltd. Peglers Investments
(Pty) Ltd (“Peglers”)
effectively holds 62.4% of
Cobra Investments. Peglers is
a wholly owned subsidiary of
Tomkins International
Holdings BV.
Rationale for the Transaction
6. The parties submit that Tomkins International has identified Cobra as a
noncore interest, which it is disposing of. On the other hand the
transaction represents an equity investment for Ethos.
Evaluating the merger
The Relevant Market
7. Cobra is involved in the manufacture of taps, mixers, valves and related
plumbing products generally used for domestic residential application. It is
a supplier of professional plumbing products such as compression fittings,
capillary fittings and manufactures components, which help with efficient
water control.
8. Cobra is active in both the local and export markets. The parties submit
that although Cobra has a relatively strong market position in South Africa,
its world market share is negligible.
9. In the local market Cobra competes with ISCA, Probass, CTM / Italtile and
other imported brands.
10. As a newly formed company Trufit is not active in any market. It controlling
shareholders, Ethos IV is an investment company, and Delta is not active
in the market in which Cobra operates. None of Ethos IV’s investment
companies operate in this market.
Impact on competition
11. Since there is neither product overlap nor any vertical relationship
between the parties, the Commission concluded that the merger would not
have an effect on the competitive environment. Cobra will not exit the
market thus the transaction does not result in a change in the market
structure.
Public interest issues
12. The parties submit that Trufit intends retaining all the current employees.
Accordingly, the transaction will not impact negatively on employment.
Conclusion
13. We conclude that the merger will not lead to a substantial lessening of
competition. There are no employment or other public interest concerns,
which would alter this finding. The merger is therefore unconditionally
approved.
_____________ 12 June 2003
D. Lewis Date
Concurring: U.Bhoola, L. Reyburn.
For the merging parties: Tabacks
For the Commission: J. Mokwana, K. Ramathula, Competition
Commission