COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no.: 09/LM/Feb04
In the large merger between:
Clidet no.485 (Pty) Ltd
and
Pamodzi Foods (Pty) Ltd
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Reasons
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Introduction
On 17 March 2004, the Tribunal approved the merger between Clidet no. 485 (Pty) Ltd
and Pamodzi Foods (Pty) Ltd. The reasons for our decision are set out below.
The transaction
The primary acquiring firm is Clidet No. 485, a newly incorporated shelf company that
has never traded before. Its shareholders are Pamodzi Investment Holdings Limited, a
black economic empowerment group, with 65%, Foodcorp Management with 15% and
Foodcorp General Staff with 20%.
The primary target firm is Pamodzi Foods (Pty) Ltd. Its shareholders are ABN Amro
Bank N.V. with 80% and Pamodzi Investment Holdings with 20%. Pamodzi Foods
jointly owns Foodcorp Holdings (Pty) Ltd and Fedfood Omega (Pty) Ltd. Foodcorp
Holdings is the sole shareholder of Foodcorp (Pty) Ltd.
The ultimate goal of the transaction is for Pamodzi Investment Holdings to acquire
control over the business of Foodcorp. In order to achieve this goal Clidet No. 485 is
acquiring all the shares in Pamodzi Foods and will thereby indirectly acquire the majority
control over Foodcorp Holdings and Fedfood Omega. As an indivisible part of this
transaction, Clidet No.485 will then acquire the remaining minority shares in Foodcorp
Holdings and Fedfood Omega, thereby acquiring direct control over the business of
Foodcorp, the wholly owned subsidiary of Foodcorp Holdings. Once these shares have
been acquired Foodcorp Holdings and Fedfood will buyback all their shares held by the
Foodcorp Holding Share Trust. Subsequent to this Clidet No.485 will directly hold 49.9%
of the issued share capital of Foodcorp Holdings and Pamodzi Foods, the wholly owned
subsidiary of Clidet No.485, will hold the remaining 50.1%.
Finally, upon completion of the above stages in the transaction Clidet No. 485 will, under
an internal group rationalisation, acquire the business of Foodcorp. The result will be that
Foodcorp will be held directly by Clidet No. 485.
Rationale for the transaction
The Foodcorp business was originally part of the Malbak Group but was acquired and de
listed from the Johannesburg Stock Exchange in 1998 by a consortium comprising, inter
alia, Pamodzi Investment Holdings, Ethos Private Equity and AMN Amro Mank NV.
Given the prevailing strength of the Rand and the time that elapsed since the original
buyout, Ethos and ABN Amro have indicated their preference to exit this investment.
The proposed buyout of Foodcorp by Pamodzi Holdings will increase the black
empowerment shareholding in Foodcorp and provide greater equity ownership to a
broader base of Foodcorp employees. This transaction will, according to the parties,
create a significant black owned company in the food industry.
Relevant product market
There is no overlap in the activities of the merging parties.
Clidet No. 485, as mentioned above, has never traded before.
Pamodzi Investment Holdings is an investment holding company, which is indirectly
Pamodzi Investment Holdings is an investment holding company, which is indirectly
involved in the food sector through its interest in Foodcorp, a foodprocessing firm.
Fedfood, Pamodzi Investment’s other jointlyowned subsidiary, is an investment holding
company, which holds forward purchase rights to shares in Clinco (Pty) Ltd and some
endowment policies.
Impact on competition
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The merger will not substantially prevent or lessen competition since there is no overlap
in the relevant markets of the merging parties.
Public interest issues
No significant public interest issues arise from the transaction.
____________ 31 March 2004
D Lewis Date
Concurring: N Manoim, U Bhoola
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