COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No.: 88/LM/Oct04
In the large merger between:
Clidet No. 533 (Pty) Limited
and
Defy Appliances Ltd and Others
Reasons for Decision
Approval
[1] The Competition Tribunal issued a Merger Clearance Certificate on 15
December 2004 approving unconditionally the merger between the abovementioned
merging parties. The reasons for the approval of the merger appear below.
The merger transaction
[2] The proposed transaction entails Clidet acquiring the business of Defy
Appliances as a going concern, the business of Defy Limited together with sale
shares in certain subsidiaries of Defy Limited. They are Defy Trust Two (Pty) Ltd;
Ocean Appliances Ltd; Carron SA (Pty) Ltd; Kindoc Park (Pty) Ltd; Malbak
Appliances Trademarks Ltd; Defy Namibia (Pty) Ltd; and Defy Botswana (Pty) Ltd.
[3] On completion of the transaction the business of Defy Appliances, and the
shares in the subsidiaries, will be directly controlled by Clidet.
Rationale for the transaction
[4] According to the parties, the transaction allows Defy Appliances’ major
shareholder, Trillion Nominees (Pty) Ltd (Ethos Fund III) to realise its investment in
Defy Appliances after a 7year investment period. It further allows the Defy
management consortium and employees to realise a significant portion of their
original investment and the opportunity to continue to participate in the business.
Standard Bank Private Equity (“SPE”) and Ayavuna Women’s Investments (Pty) Ltd
(“Ayavuna”) respectively see this deal as an opportunity for longterm investment and
as empowerment of previously disadvantaged individuals gaining a shareholding of
25%.1
Merging parties
25%.1
Merging parties
[5] The primary acquiring firm is Clidet No 533 (Pty) Ltd (“Clidet”), a special
1 See the record (Page 346), paragraph 20.
purpose vehicle created mainly for the present acquisition. The parties to the merger
informed us at the hearing that SPE and Ayavuna jointly control Clidet. 2
[6] The primary target firm is Defy Appliances together with all the subsidiaries
of Defy Ltd which are listed above. The Commission collectively referred to them as
the “target group”. It appears that none of the firms within the target group control any
firm.
What are the merging parties’ main activities?
The Primary Acquiring Firm
[7] Clidet is a newly formed (shelf) company which has not yet commenced
trading.
[8] Standard Bank is a banking and financial institution composed of a number
of Divisions through which it offers the following services:
Retail Banking Division – offers banking, investment, insurance and other
financial services to individual customers and small to mediumsized
enterprises throughout South Africa.
Corporate and Investment Banking Division – provides commercial &
investment banking services to large corporates in South Africa, foreign
banks and international counterparts.
In addition, Standard Bank also operates in the insurance industry through
control of the Liberty Group. According to the Commission, Standard Bank is
also a property investment holding company.
[9] SPE provides funding for the following classes of transaction: acquisition
finance; empowerment funding; expansion capital; leveraged buyouts; management
buyouts; mezzanine debt; and pure equity investments. 3 The Commission pointed
out that SPE does not have any interest in any entity which is involved in business
similar to that of the target group. 4
[10] Ayavuna is a newly formed investment company, which has never traded.
The primary target firms
[11] Defy Appliances manufactures the following products: domestic cooking
[11] Defy Appliances manufactures the following products: domestic cooking
appliances; domestic refrigeration appliances; domestic dishwashing appliances;
domestic laundry appliances; and room airconditioning appliances. Defy Appliances
is also responsible for the sales, warehousing, distribution and aftersales service
functions of the abovementioned products. 5
[12] Defy Trust 2 is a property holding company that owns one property which is
2 See the transcript (Page 1) dated 15 December 2004.
3 For more detail, see the email from Cliffe Dekker to the Commission (page 428429 of the Record).
4 Refer to the CC’s Report (Page 4).
5 Refer to the Record (pages 338339).
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used solely as the head office of Defy (in Jacobs, Durban).
[13] Ocean Appliances and Carron SA are both dormant companies, and have
no current business activities in RSA.
[14] Malbak Appliances Trademarks is a holding company that was incorporated
specifically to hold all trademarks of Defy.
[15] Kindoc Park is a property holding company that owns one property (in East
London), which is used by Defy Appliances to conduct its manufacturing business.
[16] Defy (Namibia) and Defy (Botswana) are foreign entities that do not trade in
the Republic of South Africa. 6
Competition Evaluation
[17] After comparing the activities of the parties, the Commission concluded that
no product overlap exists. In addition, there appeared to be no vertical concerns
arising from this merger.
[18] We, therefore, agree with the recommendation of the Commission that this
transaction is unlikely to result in the substantial lessening or prevention of
competition. We accordingly approve this merger unconditionally.
Public Interest Concerns
[19] The parties stated that the business sold would be acquired as a going
concern hence no negative impact on employment is envisaged. No other public
interest issues militate against the approval of this transaction.
_______________ 17 January 2005
Norman Manoim Date
Concurring: MTK Moerane and Medi Mokuena
For the merging parties: Jocelyn Katz & Kim de Kock (Webber Wentzel
Bowens) on behalf of Ethos & Defy.
Chris Charter (Cliffe Dekker Attorneys) on behalf of
Clidet.
For the Commission: Makgale Mohlala & Vusa Mabasa ( Mergers &
Acquisitions)
6 For all these, see email from WWB to the Commission (Page 425 of the Record).
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