COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no.: 78/LM/Dec03
In the large merger between:
Housing Solutions no. 39 (Pty) Ltd
and
Stock Buildings Africa (Pty) Ltd
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Reasons
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Introduction
On 28 January 2004 the Competition Tribunal approved the merger between Housing
Solutions No. 39 (Pty) Ltd and Stocks Building Africa (Pty) Ltd. The reasons for this
decision are set out below.
The transaction
The transaction amounts to a restructuring of Stocks Building Africa (Pty) Ltd’s
(“Stocks”) black economic empowerment component. Woman Investment Portfolio
Ltd (“Wiphold”), the third shareholder in Stocks, will be substituted with Leswikeng
Building (Pty) Ltd.
In order to facilitate Leswikeng’s acquisition of control, the entire business of Stocks
will be transferred to a shelf company, Clidet No 477 (Pty) Ltd (“Clidet”). 1 At the
same time Wiphold will relinquish its interest in Stocks and will be substituted by
Leswikeng. Subsequent to the transaction Clidet will be jointly controlled by 1)
FirstRand Ltd holding 40% of the issued share capital, 2) a consortium of
management holding 30% and 3) Leswikeng holding 30%.
The parties to the transaction
The primary acquiring firm is Housing Solutions No. 39 (Pty) Ltd (to be renamed
Leswikeng Building (Pty) Ltd (“Leswikeng”).
1 The use of Clidet as a special purpose vehicle is to facilitate the funding required for Leswikeng to
acquire joint control of the Stocks business.
Leswikeng’s shareholders are:
• African Equity Corporation (Pty) Ltd, holding 51% of the issued share capital,
• New Stands (Pty) Ltd, holding 30%, and
• African Equity Trust holding 19%.
The primary target firm is Stocks Building Africa (Pty) Ltd. The following entities
control Stocks:
• FirstRand through its subsidiary RMB Ventures One (Pty) Ltd, holding 49.9%
of the issued share capital,
• Wiphold through its subsidiary WIP Private Equity (Pty) Ltd, holding 25.1%,
and
• Management, holding 25%.
Rationale for the transaction
According to the merging parties Wiphold intends to exit from its investment in
Stocks as this does not form part of its core strategy. This leaves Stocks without an
empowerment partner. Leswikeng has been identified as a suitable empowerment
partner to substitute Wiphold.
Competition Analysis
Stocks is a building company specialising in general construction works, residential
buildings and nonresidential buildings.
Leswikeng is an investment vehicle for African Equity Corporation (Pty) Ltd
(“AEC”), which concentrates on mining, minerals and energy industries. AEC is a
100% black owned investment company and does not trade. It also has no interest in
any entity conducting a business similar to Stocks.
There is thus no overlap between the products and services provided by the respective
parties to the merger.
Based on the above we find that the merger will not substantially prevent or lessen
competition in the relevant markets.
Public Interest
The transaction does not raise any significant public interest concerns.
2
9 February 2004
N Manoim Date
Concurring: M. Holden and P. Maponya
3