COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 21/LM/Feb07
In the matter between:
Lereko Metier Capital Growth Fund Acquiring Firm
And
Liberty Star Consumer Holdings (Pty) Ltd Target Firm
Panel : Y Carrim (Presiding Member), N Manoim (Tribunal Member),
and M Madlanga (Tribunal Member)
Heard on : 18 April 2007
Decided on : 18 April 2007
Reasons Issued: 18 April 2007
Reasons for Decision
Approval
1] On 18 April 2007, the Tribunal unconditionally approved the merger between
Lereko Metier Growth Fund and Liberty Star Consumer Holdings (Pty Ltd. The
reasons for approving the transaction follow.
The parties
2] The primary acquiring firm is Lereko Metier Capital Growth Fund (‘the primary
acquiring firm’), a private equity fund registered in South Africa as a trust. The
primary acquiring firm does not directly or indirectly control any other firms and
does not hold any other interests at present.
3] The primary acquiring firm is controlled by Lereko Metier Capital Growth Fund
Lereko Metier Capital Growth Fund (‘primary acquiring firm’)
Royal Bafokeng Libstar (Pty Ltd) (‘RB Libstar’)
Royal Bafokeng Finance (Pty) Ltd (‘RBF’)
Royal Bafokeng Holdings (Pty) Ltd (‘RBH’)Royal Bafokeng Nation (‘RBN’)
Lereko Metier Growth Fund Managers (Pty) LtdMetier Investment and Advisory Services (Pty) Ltdors (Pty) LtdLereko Investors (Pty) Ltd
Managers (Pty) Ltd (‘LMCG Manager’) which is jointly controlled by Lereko
Investors (Pty) Ltd (‘Lereko’) and Metier Investment and Advisory Services
(Pty) Ltd (‘Metier’) with respective shares of 51% and 49% in the issued share
capital of LMCG Manager, as shown below:
51% 49%
100%
4] Lereko and Metier are mere holding companies, the shares of which are held
by private individuals, none of whom hold sufficient shares to exercise control
over either Lereko or Metier on a standalone basis.
5] The primary target firm is Liberty Star Consumer Holdings (Pty) Ltd (‘the
primary target firm), a company duly registered in terms of the company laws of
South Africa and is controlled as follows:
100%
100%
100%
2
Liberty Star Consumer Holdings (Pty) Ltd (‘the primary target firm’)
76%
6] It is not necessary to investigate the firms that are controlled by the target firms’
controlling entities since it is only the primary target firm that is being acquired. 1
RB Libstar does not control any other firms.
Description of the transaction
7] The transaction involves the acquisition of joint control (50%) of Liberty Star
Consumer Holdings (Pty) Ltd, the primary target firm, by Lereko Metier Capital
Growth Fund, the primary acquiring firm.
8] On 17 November 2006 Metier exercised a call option granted by RBF to Metier
or its nominees to acquire from RB Star Libstar a maximum of 50% of its
shares in the primary target firm. Metier nominated the primary acquiring firm
and Lereko SPV as the recipients of the shares. The primary acquiring firm will
acquire shares representing 27.8% and the Lereko SPV (a new entity) wil
acquire shares representing 10.2% of the primary target firm’s issued share
capital.2.
9] This transaction results in the primary acquiring firm being jointly controlled by
Lereko (via LMCG Manager and Lereko SPV), Metier (via LMCG Manager and
RBH (via RB Lbstar). 3
Rationale for the transaction
10] The acquiring firm views this transaction as an opportunity to gain a significant
interest in a rapidly growing investment group that focuses on a number of food
related, household good and personal care businesses in the fast moving
1 See form CC 4(2) submitted by the target firm for a complete list and activities of the firms
directly or indirectly controlled by the target firms’ holding companies.
2 Metier named Lereko SPV as its nominee to ensure that the primary target firm remained
50.1% owned and controlled by historically disadvantaged individuals after implementation of
the transaction, in order that the primary target firm’s BEE status is not diminished as a result
of this transaction. (Record p162). At the hearing the parties confirmed that what is being
acquired is 50% of RBF’s 76% shareholding in the target firm and the 24% would continue
being owned as premerger
3 The joint control is acquired through the minority protections in the shareholders’ agreement
concluded on 24 November 2006.
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consumer goods sector in South Africa.
11] The primary target firm has submitted that this transaction allows it to broaden
its shareholder base, which will also allow for further capitalisation of the
business that will enable it to make further acquisitions.
The parties’ activities
Primary acquiring firm
12] Lereko Metier Capital Growth Fund is an independent private equity investment
fund that secures capital from third party institutional investors. Lereko and
Metier are investment holding companies and do not perform any activities. The
activities of the firms in which either Lereko or metier holds an interest are
described below:
Lereko
[12.1] Lereko Broad Based Consortium (Pty) Ltd, holds an indirect no controlling
shareholding (7.25%) in Imperial Holdings Limited.
[12.2] Lereko Energy (Pty) Ltd which concentrates on consulting to the market for the
generation and trading of low carbon electricity, including renewable energy
and natural gas.
[12.3] Lereko Mining Suppliers (Pty) Ltd provides a mining supplies business.
[12.4] Lereko Property Company (Pty) Ltd has a 25% undivided share in a portfolio of
immovable properties owned by Sappi Limited.
[12.5] Lereko Resources (Pty) Ltd which in turn controls Lereko Waterval (Pty) Ltd
(74%), and also has a 25% undivided interest in the mineral rights in respect of
platinum group metals held by Rustenburg Platinum Mines Limited.
Metier
[12.6] Calshelf Trading (Pty) Ltd is an investment holding company that holds small
noncontrolling interests in various JSE listed companies.
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[12.7] Metier Advisory (Pty) Ltd is a business rendering advisory services to corporate
clients in relation to mergers and acquisitions, corporate finance and
commercial transactions.
[12.8] Paul Botha & Associates (Pty) Ltd is a business providing corporate law
advisory services to clients.
The primary target firm
13] Liberty Star Consumer Holdings is an investment holding company which holds
the following investments:
[13.1] Catalyst Outsource Management (Pty) Ltd provides management services to
the Libstar group, including liason with Unilever and overseeing of certain
packing operations of the group for Nestle. Catalyst has no external clients.
[13.2] Dickon Hall Foods (Pty) Limited Maufacturer and packager of branded ‘wet’
food products of certain brands on an outsourced basis, brands including ‘Mrs
Balls Chutney’, ‘Knorr Salad Dressigs’, ‘Oxo’ spreads, ‘Halls Jams’, ‘Hellmans
Mayonnaise’, and many others.
[13.3] Liberty Star Food Solutions (Pty) Ltd is an importer of specialty French, Italian
and Spanish Foodstuffs. It also provides retail food and beverage catering
services and also food and beverage vending services.
[13.4] New Chet Chemical Products (Pty) Ltd is a manufacturer, distributor and
marketer of household and household and laundry detergent products both
under its own brand names, as well as that of that of other retailers and
wholesalers’ house brands.
[13.5] Retailer Brands (Pty) Ltd manufactures and distributes ‘dry’ food products such
as soups, jellies, spices, baking powder, colourants, food essences and corn
flour under its own brand names or for other retail household brands.
Overlapping activities
14] There is no overlap in the activities of the merging parties. The acquiring group
has interests in the paper manufacturing, platinum mining, hotel and gambling
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as well as logistics business. On the other hand, the primary target firm is
involved in the manufacturing and distribution of wet and dry food products, as
well as household and laundry detergent products.
Relevant markets
15] There is no need to define the relevant markets or to analyse the effects this
transaction has on competition because the parties’ activities do not overlap.
Public Interest
16] There are no public interest issues.
Conclusion
17] The merger is approved unconditionally.
________________ 18 April 2007
N Manoim DATE
Tribunal Member
Y Carrim and M Madlanga concur in the judgment of N Manoim
Tribunal Researcher: R Kariga
For the merging parties: M Ball, Metier
For the Commission : M Mohlala (Mergers and Acquisitions)
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