COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 96/LM/Oct05
In the large merger between:
Imperial Holdings
and
MCC Contracts (Pty) Ltd and MCC Plant Hire (Pty) Ltd
Reasons for Decision
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Approval
1. On 24 November 2005 the Competition Tribunal issued a Merger
Clearance Certificate approving the merger between the Imperial
Group Holdings and MCC Contracts (Pty) Ltd and Mutual
Construction Company (TVL) (Pty) Ltd. The reasons for the decision
appear below.
The Parties
2. The acquiring firm, Imperial Holdings (“Imperial”), is not controlled by
any single entity. The shareholders who beneficially hold more than 5%
of the issued share capital in Imperial are:
• The Public Investment Corporation 18.21%
• Old Mutual 11.23%
• Ukhamba 10.1%
• Sanlam 8.4%
• Lereko Mobility 7.25%
3. Imperial controls various entities involved in logistics, car and vehicle
rental, tourism, lease and fleet management, motor vehicle
distributorships, insurance and motor finance.
4. The primary target firms are MCC Contracts (Pty) Ltd (“MCC Contracts”)
and Mutual Construction Company (TVL) (Pty) Ltd t/a MCC Plant Hire,
which are both controlled by Topclass Ventures holding 81% and 63%
of the issued share capital in each company respectively. Neither MCC
Contracts nor MCC Plant Hire control any firms.
The Merger Transaction
5. Imperial will acquire 50.1% of the entire issued share capital from the
current shareholders in MCC Contracts and MCC Plant Hire (“the target
companies”). A shareholders’ agreement provides for a put call option.
In terms of this provision Imperial will on or after the 5 th anniversary of
the option date for an indefinite period, have a call option to purchase
from the existing shareholders of the target companies the remaining
49.9% of the issued share capital of each of the target companies and
the shareholders of the target companies have a reciprocal put option to
oblige Imperial to purchase from them the remaining 49.9% on the same
terms.
6. Post the transaction the shareholding in MCC Plant Hire will be:
• Imperial 50.1%
• Topclass 26.4%
• The Vos Family trust 4.5%
• Claasen 4.5%
• Bethwaite 4.5%
• Nozala1 10%
7. And in MCC Contracts:
• Imperial 50.1%
• Topclass 33.9%
• Adams 1.5%
• Pretorius 4.5%
• Nozala2 10.0%
1 This is a BEE partner.
2 This is a BEE partner.
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Rationale for the Transaction
• The target company requires a strategic partner with access to
financial resources in order to reduce borrowing costs and to
accelerate the growth of this capital intensive business. Imperial,
which wishes to enter the market for heavy earthmoving
equipment, was the most suitable partner.
Effect on Competition
• The merger will not lead to a substantial lessening or prevention
of competition since there is no product overlap in the activities of
the merging parties.
• MCC Plant Hire rents and leases earthmoving equipment to third
parties and MCC Contracts is involved in surface mining
operations, removing minerals from opencast mines in the coal,
platinum and chrome mining as well as rehabilitating the area
once mining is completed.
• Imperial is involved in logistics, leasing and fleet management,
car rental and tourism, vehicle distributorships and vehicle
insurance.
Public Interest issues
• There are no significant public interest issues arising from the
transaction.
28 November 2005
N Manoim Date
Concurring: Y Carrim and M Mokuena
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For the merging parties: Safeera Mayet of Tugendhaft Wapnick Banchetti &
Partners
For the Commission: Seema Nunkoo
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