Kumnandi Food Company (Pty) Ltd and Republiek Voedsel (Pty) Ltd (43/LM/May05) [2005] ZACT 63 (20 September 2005)

COMPETITION TRIBUNAL 
REPUBLIC OF SOUTH AFRICA
     Case No: 43/LM/May05
In the large merger between: 
Kumnandi Food Company (Pty) Ltd 
and
Republiek Voedsel (Pty) Ltd 
Reasons for Decision
________________________________________________________________
APPROVAL
On   20   September   2005   the   Competition   Tribunal   issued   a   Merger   Clearance  
Certificate approving the merger between the Kumnandi Food Company (Pty) Ltd  
and Republiek Voedsel (Pty) Ltd in terms of section 16(2)(a). The reasons for the  
approval of the merger appear below.
The Parties
1. The   acquiring   firm   is   Kumnandi   Food   Company   (Pty)   Ltd.   (“Kumnandi”).  
Kumnandi   is   held   as   to   49%   by   Investec   and   as   to   51%   by   Audentis  
Investment   (Pty)   Ltd   (“Audentis”)   the   investment   vehicle   through   which  
management  of  the company is  holding  its share in  Kumnandi. Audentis  
comprises individual shareholders.
2. The primary target firm is Republiek Voedsel (Pty) Ltd (“RV”), controlled by  
five shareholders. RV controls Repvoed which does not own any firm. The  
present shareholders of RV are:
Voedsel Vier  51.55%
CMB Nominees (Pty) Ltd 5.59%
PZ Burger 5.71%
Investec Employee Benefits 5.88%
DD Weinberger 3.21%

The Merger Transaction
3. This transaction constitutes a management buy­out in terms of which the  
businesses of RV and Repvoed are being purchased by Kumnandi as going  
concerns.     The   transaction   consists   of   two   stages,   and   notification   is  
triggered by the first stage.
4. In the first part of the transaction, Kumnandi is purchasing the entire share  
capital   of   RV.     Post­merger,   Kumnandi   will   therefore   be   the   sole  
shareholder of RV.
5. The second  part of the transaction, is  conditional on  the first  part taking  
place.   It   entails   a   transfer   of   RV   (as   a   wholly­owned   subsidiary   of  
Kumnandi) in terms of an intra­group transaction in terms of section 45 of  
the Income Tax Act 58 of 1962.
Rationale for the Transaction 
6. The   RV   and   Repvoed   businesses   will   be   transferred   to   Kumnandi   to  
facilitate   their   expansion   and   transfer   equity   to   previously   disadvantaged  
individuals. It would also enable the development of Kumnandi’s computer  
systems   to facilitate real time management of its franchised outlets.   The  
current shareholders are selling for various reasons including the fact that  
they   have   become   risk   averse;   the   need   to   become     BEE­compliant,  
coupled with their long­term intentions to disinvest. 
The relevant product and geographic market
7. Kumnandi is a new company that has not commenced trading yet.  
Investec is a provider of financial services. RV hold franchise rights given to  
them   by   Kentucky   Fried   Chicken     International   Inc.   to   run   quick   service  
restaurants   and sell them under the KFC trademark.   RV and Repvoed  
operate 42 KFC outlets across four provinces in South Africa.
8. There is no product overlap.
Effect on Competition
ix.Post­merger, Kumnandi will manage the 42 outlets  previously  
under RV’s management.

10. Since there is no product overlap no competition concerns arise from this  
transaction.
Conclusion
We conclude that the merger will not lead to a substantial lessening or prevention  
of competition.  
The Tribunal therefore approves the transaction unconditionally. There are no  
public interest concerns which would alter this conclusion.
__________
20 September 2005
D. Lewis    Date
Concurring: M. Mokoena, N. Manoim 
For the merging parties:   G. Macan (Kumnandi) and A. Apostolidis (DM Kisch  
Inc)
For the Commission:  O. Strydom and T. Letsietsa (Mergers and  
Acquisitions)