COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 89/LM/Dec02
In the large merger between:
Nedbank Limited
and
Fasic Africa (Pty) Limited
Reasons for Decision
APPLICATION TO SUBSTITUTE
The parties asked us to approve an application to substitute Nedbank Limited
for BoE Bank Limited. We hereby approve this substitution. 1
APPROVAL OF MERGER
On 17 December 2003 the Competition Tribunal issued a Merger Clearance
Certificate in terms of Section 16(2)(a) of the Act approving the merger
Nedbank Limited and Fasic Africa (Pty) Ltd. The reasons for the approval of
the merger appear below.
Parties
1. The acquiring firm is Nedbank Limited. Pursuant to the referral of this
transaction to the Tribunal, the banking business of BoE, including BoE
Bank Limited was transferred to Nedbank Limited (formerly Nedcor
Bank Limited). In terms of this transaction and in light of section 54 of
the Banks Act, all of the assets and liabilities of BoE Bank were
transferred to Nedbank Limited. Accordingly, Nedbank Limited has now
acquired the same rights and obligations of BoE Bank.
1 The need for the substitution is technical and arose from the requirement in the Banks Act that we
refer to below.
2. The target firm is Fasic Africa (Pty) Ltd (“Fasic”) a diversified consumer
goods holding company. One of its subsidiaries is the Lion Match
Company, the primary manufacturer of safety matches in RSA. It also
has a 50% (minus 1) share of KimberlyClark Southern Africa (Pty) Ltd,
(a leading manufacturer of tissue, personal care, and health products).
It owns 100% of National Shaving Products (Pty) Ltd.
3. Prior to the merger, Fasic is controlled by Industrial Development
Corporation of South Africa (“IDC”) as to 55%; BoE as to 27% and
Fasic Investment Corporation (“FIC”) as to 18%.
The Merger Transaction
4. The transaction comprises a disposal of IDC’s 55% interest in Fasic.
BoE (Corporate), which already owns 27% of Fasic, is acquiring this
interest in pursuance of its preemptive rights to acquire such shares.
The acquisition will thus give it a majority shareholding in the company
in that it will hold 82% of the entire issued share capital of Fasic.
Background
5. Just prior to the hearing before us, there were two applications to
intervene based on similar grounds by FIC (Fasic Investment
Corporation Limited) and Steephill Trading (Pty) Ltd (“Steephill”). FIC
claimed that it had a preemptive right to acquire the IDC's
shareholding in Fasic but was prevented from exercising such right.
Steephill claimed that in terms of a prior agreement with the IDC, it is
entitled to the shares, in default of FIC exercising its option. Both firms
also alleged that insofar as they represent previously disadvantaged
groups, the sale to BOEas opposed to them, might have an adverse
affect on empowerment. They maintained the merger should either be
prohibited or postponed pending the outcome of arbitration
proceedings between the parties
6. At a hearing on 15 th January 2003, we allowed the intervening parties
6. At a hearing on 15 th January 2003, we allowed the intervening parties
to intervene and set dates for the filing of certain documents. A revised
timetable was agreed to wherein certain additional information was to
IDC BoEFIC
55%18% 27%
Fasic Africa
be made available to the intervenors by a certain date. They were also
given an opportunity to file a statement of issues. A further prehearing
was convened for early March 2003.
7. During the course of March, we were notified that the parties were
attempting to settle the dispute. In October 2003 we were notified that
the parties had reached agreement. 2 On 11 November 2003 Steephill
Trading notified that it was withdrawing its objection to the first
merger.3
Rationale for the Transaction
8. The IDC wished to realise its investment in Fasic.
The Relevant Market
9. Nedbank is involved in corporate and retail banking, including provision
of various financial services, such as investment advice, corporate
finance, mortgage loans and client facilitation and proprietary trading.
10. Fasic is engaged in the manufacture and distribution of safety matches,
shaving product; the distribution of imported disposable lighters.
Furthermore, it manufactures tissues and health products through its
interest in Kimberly Clark Southern Africa (Pty) Ltd.
Impact on competition
11. There is no product overlap whatsoever, neither between the merging
parties nor any of their subsidiaries or associated companies. There is
accordingly no impact on competition. Although Old Mutual, which is
the largest shareholder in Nedcor, holds a large investment in Nampak,
which is a competitor of Kimberley Clark, there is no evidence that it is
able to exercise control over that company as a result of that stake.
We accordingly conclude that this 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.
_____________ 20 January 2004
N. Manoim Date
2 Basically, Nedbank, BoE, Steephill and FIC have entered into a sale of shares agreement in terms of
which Steephill Trading or its nominee would acquire from Nedbank all of the shares in Fasic held by
BoE following the approval of the first merger by the CT.
3 There has been a subsequent ongoing sale of the Nedbank stake to Steephill Trading which
transaction was approved by the Competition Commission in early November 2003.
Concurring: L. Reyburn, T. Orleyn
For the merging parties: M. Brassey instructed by Edward Nathan
Friedland
For the Commission: K. Ramathula, Competition Commission