COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 10/LM/Feb07
In the matter between:
AfriSam Consortium (Pty) Ltd Acquiring Firm
And
AfriSam (Pty) Ltd Target Firm
Panel : Y Carrim (Presiding Member), M Mokuena (Tribunal Member),
and M Holden (Tribunal Member)
Heard on : 30 May 2007
Decided on : 30 May 2007
Reasons Issued: 7 June 2007
Reasons for Decision
Approval
1] On 30 May 2007, the Tribunal unconditionally approved the merger between
AfriSam Consortium (Pty) Ltd and AfriSam (Pty) Ltd. The reasons for approving
the transaction follow.
The parties
2] The primary acquiring firm is AfriSam Consortium (Pty) Ltd (‘ASC’). ASC is a
newly incorporated company registered in terms of the company laws of South
Africa. ASC is a Broad Based Black Economic Empowerment company (‘BEE
Company’) formed to expedite this transaction. The shareholders of ASC can
be classified as follows:
[2.1] Strategic BEE partners 35%;
[2.2] Management and employees 20%;
[2.3] Broad based beneficiaries which would include a range of charity and local
community groups 15%
.
3] The strategic BEE partners are constituted in a legal entity called Bunker Hills
Investments (Pty) Ltd (‘Bunker Hills’). The shareholders of Bunker Hills are
individuals who each own less than 10% shares. Post merger Bunker Hills will
control ASC and the current directors of Bunker Hills will be directors of Bunker
Hills postmerger.
4] The remaining 30% will be owned by the equity partner. 1
5] The primary target firm is AfriSam (Pty) Ltd (‘AfriSam’), a newly incorporated
company in terms of the company laws of the Republic of South Africa. AfriSam
is controlled by Cemasco B.V (‘Cemasco’). Cemasco is controlled by Holcim
Limited (‘Holcim’), a company listed on the Swiss Stock Exchange. No single
shareholder controls Holcim.
Description of the transaction
6] The transaction is effected though a number of steps which can be summarised
as follows:
[6.1] Prior to this transaction Cemasco, Holcim’s subsidiary, owns 54.35% of Altur
Investments, the company that holds 100% of the issued shares of Holcim SA.
The other 45.65% in Altur Investments is held by Aveng Limited (‘Aveng’).
Cemasco and Aveng jointly control Altur Investments and Altur Investments
own 100% of Holcim SA.
[6.2] AfriSam (Pty) Ltd (‘AfriSam’) is a newly wholly owned subsidiary in the Holcim
1 At the hearing the parties stated that the funding structure has not yet been finalized but that
they would notify the Commission in the event that the funding arrangements led to a change
in control.
2
Group created for the purposes of this transaction. Holcim will transfer
Cemasco’s 54.35% shareholding in Altur to AfriSam, a new subsidiary wholly
owned by Cemasco. Thus Cemasco will own 100% of the issued shares in
AfriSam. This leg of the transaction does not result in a change of control as
AfriSam will merely replace Cemasco as a direct shareholder of Altur
Investments. Both AfriSam and Cemasco are wholly owned subsidiaries of
Holcim.
[6.3] Thereafter, Cemasco will sell 85% of its shareholding in AfriSam to ASC. On
completion of this transaction ASC will own 85% of AfriSam and Cemasco will
own the remaining 15% with minority protection rights. On completion of this
transaction ASC and Holcim will jointly own AfriSam which has 54.35%
shareholding in Altur Investments. This leg of the transaction will result in a
change in control in that AfriSam which was a wholly owned subsidiary of
Cemasco which is in turn wholly owned by Holcim, will now be jointly controlled
by ASC and Cemasco.
[6.4] Aveng will dispose its 45.65% shareholding in Altur Investments to AfriSam by
means of a share buy back. 2 The end result of this transaction is that AfriSam
will control 100% of the shares in Altur Investments. ASC will control 85% of the
issued shares in AfriSam and Cemasco will control 15% of the issued shares in
AfriSam.3
7] At the hearing the parties stated that postmerger AfriSam had decided to
separate the Holcim South African operations from its international operations.
Accordingly it had created a new wholly owned subsidiary alongside Altur
called Micawbar 570 (Pty) Ltd (‘IHC’). 4 IHC will be the holding company for
funding purposes and will hold 100% in Turquinoise Moon Trading 527 (Pty)
funding purposes and will hold 100% in Turquinoise Moon Trading 527 (Pty)
2 At the time of the referral to the Tribunal, the Commission had analysed the transaction as if
Aveng had not disposed its 45.65% in Altur Investments because this event was to take place
sometime in future. In addition, there was no documentary evidence showing that Aveng
would dispose of its shareholding in Altur Investments. Subsequently, on 24 April 2007 the
merging parties filed evidence of Aveng’s disposal of its shareholding in Altur. The
Commission submitted an amended recommendation on 15 May 2007 stating that the
disposal by Aveng did not affect the competition analysis of the transaction.
3 See the repurchase agreements on p316 and 347 and p382 of the record.
4 IHC is a newly formed company
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HZA
Newco
AlturIHC AfriSam ASCHolcim/ Cemasco
Ltd (‘Newco’) which will be the
operational company housing Holcim South Africa’s operations. The
international operations of Holcim will be housed in a company called HZA. The
parties submitted the diagram below which shows the postmerger
shareholdings:
15% 85%
100% 100%
100% 100%
Rationale for the transaction
8] The merging parties have submitted that in the spirit of empowerment, Holcim
decided to sell 85% of its stake in AfriSam (and thus a proportionate
shareholding of Holcim’s stake in Holcim SA) to ASC, an empowerment
consortium. In the same spirit of empowerment Aveng has decided to dispose
of its shareholding in Altur Investments by means of a share buy back by Altur
Investments.
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The parties’ activities
Primary acquiring firm
9] ASC is a newly formed broadbased BEE consortium which has not traded
before.
The primary target firm
10] AfriSam is a newly formed subsidiary of Cemasco. Cemasco and other Holcim
subsidiaries are active in the manufacturing and distribution of cement and
cementious materials. Holcim SA’s core business is to supply the building and
civil construction industries with materials used in the production of concrete
and building of roads, with readymix concrete.
Competition analysis
11] There is no overlap in the activities of the merging parties as both ASC and
Bunker Hills are newly formed companies which have not traded previously. As
a result, there no need to define the relevant markets or analyse the effects of
this transaction on competition.
Public Interest
12] There are no public interest issues.
Conclusion
13] The merger is approved unconditionally.
________________ 7 June 2007
Y Carrim DATE
Tribunal Member
M Mokuena and M Holden concur in the judgment of Y Carrim
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Tribunal Researcher: R Kariga
For the merging parties: L Morphet and L Vundla, Deneys Reitz Attorneys
For the Commission : M Mohlala and M Matsimela (Mergers and Acquisitions)
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