COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 12/LM/Feb06
In the large merger between:
Ponahalo Investments (Pty) Ltd
and
De Beers Consolidated Mines Holdings (Pty) Ltd
Reasons for Decision
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Introduction
1. On 8 March 2006 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between Ponahalo Invetsments (Pty) Ltd
and De Beers Consolidated Mines Holdings (Pty) Ltd. The reasons appear
below.
The transaction
2. Ponahalo lnvestments (Pty) Ltd (“Ponahalo Investments”), a Black
Economic Empowerment entity, will indirectly acquire 26% of the ordinary
share capital in De Beers Consolidated Mines Ltd (“DBCM”) from De Beers
Société Anonyme (“DBsa”). In addition to the 26% equity interest certain
minority protections will be afforded to Ponahalo Investments such as veto
rights regarding the budget and business plans and the appointment of
directors.
3. On completion of the transaction DBsa will hold 74% of the issued ordinary
share capital in DBCM Holdings and the balance of 26% will be held by
Ponahalo Investments. Ponahalo will appoint 3 directors to the DBCM
Board which currently consist of 13 directors.
4. The primary acquiring firm is Ponahalo lnvestments, a special purpose
vehicle constituted for the purposes of facilitating the conclusion of the
merger transaction.
5. Ponahalo Investments is controlled by Ponahalo Holdings (Pty) Ltd
(“Ponahalo Holdings”). Ponahalo Holdings’ shareholders are:
1) Ponahalo Capital (Pty) Ltd (“Ponahalo”) holding 50% of the shares, 1
2) The Equal Allocation Trust, a trust to be established by DBCM for the
benefit of current employees and identified pensioners of the De
Beers Group, holding 35%, and
3) The Key Employee Trust, a trust to be established by DBCM for the
benefit of key employees of the De Beers Group, holding 15%.
6. The primary target firm is DBCM, which is a 100% subsidiary of DBCM
Holdings (Pty) Ltd (“DBCM Holdings”), is ultimately jointly controlled by
Central Holdings Ltd and Anglo American plc.
Rationale for the Transaction
7. The transaction will result in DBCM achieving 26% ownership by historically
disadvantaged South Africans as stipulated by the BEE Charter for the
South African Mining Industry.
The relevant market
8. Ponahalo is a dormant company, which has never engaged in any
commercial activities. DBCM is active in the mining and exploration of
rough diamonds.
9. Since there is no overlap in the activities of the merging parties the merger
will not lead to a substantial lessening or prevention of competition.
Public Interest
10. There are no public interest concerns.
1 The shareholders of Ponahalo are: EM Dipico (18%), Peotona Capital (16%), B Petersen (13%), M
Mashishi (8%), The Women’s Trust (17.5%), The Disabled Persons Trust (10%) and The Community Trust
(17.5%).
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28 March 2006
D. Lewis Date
Concurring: U. Bhoola and M. Mokuena
For the merging parties: Webber Wentzel Bowens
For the Commission: Thamsanqa TM Kekana, Mergers and Acquisitions
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