COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no: 71/LM/Aug05
In The Large Merger Between:
Corvest 6 (Pty) Ltd Acquiring Firm
And
FCMS BEE Cash Management (Pty) Ltd Target Firm
Reasons for Decision
Approval
On the 20 September 2005 the Competition Tribunal issued a Merger Clearance Certificate
approving the transaction between Corvest 6 (Pty) Ltd and FCMS BEE Cash Management (Pty)
Ltd. The reasons for this decision follow.
The transaction
i.The Fidelity group of companies is currently in the process of unbundling and
restructuring. As part of this process, the acquiring firms viz. Corvest 6 (Pty)
Ltd (“Corvest”), Dickerson Investments (Pty) Ltd (“Dickerson Investments”),
Safika Investments (Pty) Ltd (“Safika”), Zungu Investments Company (Pty)
Ltd and a consortium of the members of management (“Management
consortium”) collectively, will acquire 100% of the shareholding in FCMS BEE
Management (Pty) Ltd (“FCMS”) from the Fidelity group. Post merger,
Corvest, Dickerson Investments, Safika and the Management consortium will
jointly control FCMS. 1
The acquiring firms
2. Corvest is controlled by Corvest Holdings (Pty) Ltd, which in turn is controlled by FirstRand
Bank Ltd. 2 The Dickerson Family Trust is the sole shareholder of Dickerson Investments
and does not hold interest or shareholdings in any firms other than firms in the Fidelity group
of companies. Safika is controlled by Safika Holdings (Pty) Ltd. 3 According to the parties no
1 According to the parties, Zungu Investments minority shareholding will not confer upon it any form of
joint control.
2 FirstRand Bank controls a number of firms, a list of which can be found in its Annual Report from page
214542 of the Record.
3 A list of firms controlled by Safika can be found on pages 547549 of the Record.
one person controls the Management consortium. 4
The target firm
3. FCMS is wholly controlled by Fidelity Services Group Properties (Pty) Ltd (“FSG
Properties”), which in turn is controlled by Fidelity Services Group Ltd (“FSG”). FSG has a
number of shareholders and is not controlled by any one firm. FCMS controls several firms
including Fidelity Insurance Ltd, Elwierda (Pty) Ltd, CMS Micro Finance (Pty) Ltd, Fidelity
Services Group Lesotho (Pty) Ltd and Fidelity Services Group Namibia (Pty) Ltd. FCMS is
also a shareholder in various joint venture black empowerment companies including Quattro
Cash Management Services (Pty) Ltd and REAFidelity Services Group (Pty) Ltd.
Pre merger structure (No controlling shareholder)
22.18% 38.34% 14.69% 14.08% 10.7%
100%
100%
Post merger structure (Joint control)
JOINT CONROLLERS
4 Zungu Investments is an investment holding company.
Colin Fourie and
The Colin Fourie
Family Trust
The FG Share Incentive
Trust/FG Share TrustThe Dickerson
Family Trust
Corvest Holdings
(Pty) Ltd
Regency International
Group
Fidelity Services Group
Ltd
Various other companies in the
Fidelity Group incorporating the
cleaning, hygiene, labour
broking services, guarding
businesses, as well as IT
systems and properties leased
by Group operations.
Fidelity Services Group
Properties
FCMS BEE Cash
Management
Dickerson
Investments
Zungu Investments Corvest 6Safika Management
consortium
2
5% 30% 20.1% 30% 14.9%
Rationale for the transaction
4. According to the parties, the transaction will introduce BEE partners into each of the Fidelity
group’s main areas of business. The improvement of its BEE status will help it secure
contracts for products and services and ensure the ongoing viability of the businesses.
The Parties’ activities
5. The FirstRand Group of companies offers diverse financial services activities in the areas of
retail, corporate, investment and merchant banking, life insurance, employee benefits,
health insurance and asset and property management. Safika is a private investment
company, which has interests in entities providing a wide array of services, primarily
focusing on information and communications technology, financial services, resources and
human capital. Corvest is involved in the provision finance and other assistance to potential
investors. Neither Dickerson Investments nor the Management consortium provides any
product or services. 5
6. Premerger, FSG operated through its cleaning services (including hygiene and labour
broking), cash management services and security and guarding services divisions.
However, due to the restructuring going on in the Fidelity group, it is intended that FSG will
ultimately be liquidated. FSG Properties owns various immovable properties from which the
companies in the Fidelity conduct their operations. According to the parties, it is anticipated
that FSG Properties will also eventually be liquidated once its immovable properties have
been sold off. FCMS focuses on the rendering of cash management services which includes
(but is not limited to) the collection and delivery of cash and other valuables between banks
(but is not limited to) the collection and delivery of cash and other valuables between banks
and or commercial operations as well as the full spectrum of ATM services. 6
Impact on competition
7. During the hearing on the 20 September 2005, the parties conceded that there was a small
degree of overlap between the activities of FirstRand and FCMS.
5 The Management consortium is a new entity. Zungu Investments holds interests in a number of
different companies across various industries. According to the parties, none of these competes with
FCMS.
6 See page 611 of the record for a full list of cash management services which FCMS provides.
FCMS BEE Cash
Management
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8. Firstly, as a retail bank, FirstRand is involved in the provision of ATM services. Secondly,
FirstRand has an interest in SBV Services (Pty) Ltd, a company formed by the major banks
in South Africa, and mainly responsible for the collection and delivery of banknotes between
the South African Reserve Bank and the banks.
9. We however, do not find it necessary to explore this overlap as we are satisfied that on the
information submitted to us, the transaction will not alter the competitive landscape of any of
the markets that the parties are active in. Furthermore, there are no significant public
interest concerns arising out of the transaction.
10. We accordingly approve the transaction without conditions.
23 November 2005
N Manoim Date
Concurring: D Lewis and M Mokuena
For the merging parties: N Browne (Cliffe Dekker Attorneys)
For the Commission: O Strydom (Mergers and Acquisitions)
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