COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 09/LM/Feb06
In the large merger between:
Friedshelf 649 (Pty) Ltd) and Ellerine Brothers Limited
and
Wireless Business Solutions (Pty) Ltd
Reasons for Decision
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Approval
1. On 22 March 2006 the Competition Tribunal issued a merger clearance
certificate approving the merger between Friedshelf 649 (Pty) Ltd and
Ellerine Bros (Pty) Ltd and Wireless Business Solutions Holdings (Pty) Ltd.
The reasons appear below.
The Parties
2. The acquiring firms are Friedshelf 649 (Pty) Ltd (“Friedshelf”) and Ellerine
Bros (Pty) Ltd (“Ellerine”). 1 Friedshelf is a special purpose vehicle formed
for the purposes of effecting this transaction. Friedshelf is directly controlled
by Blue Label Investments (Pty) Ltd (“Blue Label”). Ellerine is subject to the
direct joint control of the Eric Ellerine Trust and the Sidney Ellerine Trust
(collectively the “Ellerine Trusts”).
3. The primary target firm is Wireless Business Solution Holdings (Pty) Ltd
(“Wireless Holdings”). The operations of Wireless Holdings are directly
controlled by Richtrau No. 10 (Pty) Ltd (“Richtrau”). Wireless Holdings
controls Wireless Business Solutions Service Provider Company (Pty) Ltd
1 Not related to the furniture group, Ellerine Holdings Limited.
(“Wireless SP) and Wireless Business Solutions (Pty) Ltd.
The Merger Transaction
4. The shareholding of and in Wireless Holdings pre and post merger is as
follows:
WBS Holdings (Pty) Ltd Diagramatic Representation
5. Prior to the current transaction, Friedshelf and Ellerine entered into an
agreement to purchase 40% of the entire issued share capital of Wireless
SP (in a ratio of 30:70). 2
2 This transaction was not notified as Wireless SP’s turnover and asset values did not meet the
merger thresholds. See page 39 of the record.
2
6. As an indivisible part of the transaction, the acquiring firms are also entitled
to purchase, in the aggregate, 40% of the entire issued share capital of
Wireless Holdings (with Friedshelf acquiring 28% and Ellerine acquiring
12%), together with 40% of a loan account held by Richtrau against
Wireless Business Solutions (Pty) Ltd. It is the acquisition of this 40%
shareholding and claims against Wireless Holdings that comprises the
current transaction. The remaining 60% of Wireless Holdings will continue
to be held by Richtrau.
7. According to the parties, Friedshelf and Ellerine will exercise joint control
over Wireless Holdings. 3
Rationale for the Transaction
h. The proposed transaction is viewed by the acquiring firms as
facilitating their entry into a market, which they perceive as
providing a realistic opportunity for growth. For the target firm the
merger will provide it access to significant additional resources
which will allow it to capitalise the business and facilitate its
growth.
The relevant product markets
i. The parties operate in different product markets and their
activities do not overlap. On the one hand, Friedshelf has never
traded before and has no business activities. Blue Label, which
effectively controls Friedshelf, is an investmentholding entity,
involved in a number of different enterprises including
telecommunications, information technology, venture capital and
property. Ellerine is a familycontrolled propertyowning and
investment company.
j. Wireless Holdings, on the other hand, offers products and
services in the broadband 4 access and associated data
services market. It also provides the infrastructure for the
transmission of data to wholesale and retail customers.
transmission of data to wholesale and retail customers.
3 See Clause 10.4 of the shareholders’ agreement at page 230234 of the record.
4 These are high speed fixed and mobile Internet connectivity services.
3
Public Interest
xi.There are no public interest issues that may raise serious
competition concerns.
Conclusion
12. We conclude that the merger will not lead to a substantial lessening or
prevention of competition.
07 April 2006
Y. Carrim Date
Concurring: M Moerane and L Reyburn
For the merging parties: Nathalia Lopez and Lee Mendelsohn, Edward Nathan
Corporate Law Advisors
For the Commission: Thami Kekana
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