COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 29/LM/Mar07
In the matter between:
Royal Bafokeng Capital (Pty) Ltd Acquiring Firm
And
Yomhlaba Resources Limited 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
Royal Bafokeng Capital (Pty) Ltd and Yomhlaba Resources Limited. The
reasons for approving the transaction follow.
The parties
2] The primary acquiring firm is Royal Bafokeng Capital (Pty) Ltd (‘Royal
Bafokeng Capital’), a company incorporated under the laws of the Republic of
South Africa.
3] Royal Bafokeng Capital is controlled Royal Bafokeng Ventures (Pty) Ltd (‘Royal
Bafokeng Ventures’) which holds 51.20% of the issued shares and the balance
of 48.8% shareholding is owned by Strider Holdings (Pty) Ltd.
4] Royal Bafokeng Ventures is a wholly owned subsidiary of RBH Financial
Holdings (Pty) Ltd (‘RBH Finhold’). RBH Finhold is controlled by Royal
Bafokeng Holdings (Pty) Ltd. RBH is in turn a wholly owned subsidiary of Royal
Bafokeng Nation (‘RBN’). 1
5] Royal Bafokeng Capital controls Hardrock Engineering (Pty) Ltd and Zaptronix
Limited. 2 RBH Finhold controls the following firms:
[5.1] Salestalk 268 (Pty) Ltd, a dormant company;
[5.2] Royal Bafokeng Financial Services Group which has a noncontrolling interest
of 10% in SA Eagle;
6] RBH controls the following firms:
[6.1] Royal Bafokeng Industrial Holdings (Pty) Ltd;
[6.2] Royal Bafokeng Management Services (Pty) Ltd;
[6.3] RBH Resources Holdings (Pty) Ltd;
[6.4] RBH Telecom Holdings (Pty) Ltd.
7] The primary target firm is Yomhlaba Resources Limited (‘Yomhlaba
Resources’), a company incorporated under the laws of the Republic of South
Africa. Yomhlaba Resources is controlled by the New Africa Mining Fund
Nominees (Pty) Ltd (‘NAMF’).
8] NAMF is a fund established in conjunction with the Department of Minerals and
Energy and players in the mining industry to facilitate BEE investment in the
mining industry in South Africa.
1 The Royal Bafokeng Nation is a community of approximately 300 000 people resident in the
Rustenburg valley region of the North West Province. (Record p419).See p 423 of record for a
list of RBN’s interests.
2 Hardrock Engineering (Pty) Ltd supplies roof support products for use in the hard and soft
rock mining industry, at present, exclusively in Zambia. Zaptronix Limited is listed on the JSE
Securities Exchange and is involved in risk management by virtue of the information and
technology solutions that it sells, in areas of energy risk management and mobile logistics risk
management. (Record p419).
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9] Yomhlaba Resources controls Yomhlaba Coal (Pty) Ltd (‘YBA Coal’). The other
target firms, which Yomhlaba Resources will own postmerger, are Ilanga Coal
Mine (Pty) Ltd (‘Ilanga’) and Umlabu Colliery (Pty) Ltd (‘Umlabu’). These
companies are currently owned subsidiaries of Risk Reduction International
Limited (‘RRI’), a company incorporated under the laws of Mauritius.
Description of the transaction
10] The parties submit that the transaction will be effected through a number of
interlinked agreements, which are conditional upon each other. In terms of the
structure of the transaction, Risk Reduction International Limited (‘RRI’), a
Mauritius corporation, will sell its 100% shareholding in Umlambu Colliery to
Yomhlaba Resources or its nominee which shall be a wholly owned subsidiary.
11] In addition RRI will sell 76.475% of its shareholding in Ilanga Coal Mine (Pty)
Ltd (‘Ilanga Coal’) to the acquiring firm (Royal Bafokeng Capital), and will sell its
10.5882% shareholding in Ilanga Coal to South African Coal Mining Holdings
(Pty) Ltd (‘SACM’).
12] Further, the primary acquiring firm, RRI and SACM will sell their Ilanga Coal’s
100% shareholding to Yomhlaba.
13] The consideration payable by Yomhlaba Resources to Royal Bafokeng Capital,
RRI and SACM in respect of Ilanga Coal’s shares will be as follows:
[13.1] Yomhlaba Resources will issue 65% of its share to Royal Bafokeng
Capital;
[13.2] Yomhlaba Resources will issue 11% of its share to RRI; and
[13.3] Yomhlaba Resources will issue 9% of its share to SACM.
14] The balance of the shares in Yomhlaba Resources will be owned as follows:
[14.1] NAMF will own 7.5%; and
[14.2] Minorities will own 7.5%.
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Ilanga Umlabu
YBA Coal
Yomhlaba ResourcesRoyal Bafokeng Capital Minorities
SACM
RRINAMF
15] On completion of the transaction, Yomhlaba Resources will control Umlabu
Colliery and Ilanga Coal from RRI. Royal Bafokeng Capital will control
Yomhlaba Resources with 65% shareholding
16] The diagram below shows the net effect of the transaction: 3
65% 7.5% 11% 9% 7.5%
100% 100%
100%
Rationale for the transaction
17] For the primary acquiring firm, the merger represents the first step towards its
goal of establishing a BEE coal mining platform focused on the acquisition,
management and further development of coal mining businesses and related
activities in the coal mining industry.
18] The transaction will enable the primary target firm to achieve favourable BEE
status in accordance with the Codes of Good Practice published under the
BroadBased Black Economic Empowerment Act, 2003. The merger will also
enable the primary target firm to establish a coal mining business and to lift the
suspension of its shares on the JSE Securities Exchange.
The parties’ activities
Primary acquiring firm
3 Record p427.
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19] The acquiring group is involved in the following activities:
[19.1] Rendering risk management and business intelligence consulting
services;
[19.2] supplying of roof support products;
[19.3] manufacturing and distributing of plastic packaging;
[19.4] providing freight forwarding, courier and delivery services;
[19.5] distribution of IT equipment;
[19.6] manufacturing of automatic components;
[19.7] platinum and chrome mining;
[19.8] ferrochromesmelting;
[19.9] manufacturing of concrete blocks, ricks and tiles;
[19.10] manufacturing, distribution and marketing of household and laundry
detergent products;
[19.11] waste management services; and
[19.12] Manufacturing of wet and dry food products.
The primary target firm
20] Through its subsidiary YBA coal, the primary target firm was involved in the
business of coal dump discard material recovery mining operations at Ingwe
Colliery, a subsidiary of Billiton plc (‘Billiton’) under contract. YBA Coal has
since ceased to carry on that business and is now engaged in a dispute with
Billiton regarding the summary termination of its contract in relation to Ingwe
Colliery. The JSE Securities Exchange responded by the listing of the shares of
the primary target firm on the Altx board.
21] Ilanga and Umlabu are coal mining companies operating in Mpumalanga.
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Competition analysis
22] There is no overlap in the activities of the merging parties. The transaction is
therefore unlikely to substantially prevent or lessen competition in any market.
Public Interest
23] There are no public interest issues.
Conclusion
24] 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
Tribunal Researcher : R Kariga
For the merging parties: M Ball Metier Advisory (Pty) Ltd
For the Commission : I Selaledi, and M Mohlala (Mergers and Acquisitions)
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