COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 47/LM/May07
In the matter between:
FBC Nominees No1 (Pty) Ltd Acquiring Firm
Coronation Capital (Pty) Ltd
And
SA Airlink (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member), N Manoim (Tribunal
Member) and Y Carrim (Tribunal Member)
Heard on : 12 June 2007
Order issued on : 12 June 2007
Reasons issued on : 17 July 2007
Reasons for Decision
Approval
1]On 12 June 2007 , the Tribunal approved the merger between FBC Nominees
No 1 (Pty) Ltd, Coronation Capital (Pty) Ltd and SA Airlink(Pty) Ltd. The
reasons follow below.
The Transaction
2]The primary acquiring firms is FBCF Nominees No 1 (Pty) Ltd (“FBCF”) and
Coronation Capital (Pty) Ltd (“Coronation”). FBCF is a wholly owned
subsidiary of Nedbank Group Limited (“Nedbank”), which is ultimately
controlled by Old Mutual plc. Coronation is a wholly owned subsidiary of
Coronation Investments and Trading Limited, an unlisted public company with
various subsidiaries.
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3]The primary target firm is SA Airlink (Pty) Ltd (“SA Airlink”). Its shareholders
are:
Osprey Airline Investments (Pty) Ltd 45.90%
Roger Arnold Foster 19.35%
Barrie James Webb 19.35%
South African Airways (Pty) Ltd 10%
Osprey Airline Holdings (Pty) Ltd 5.40%
4]The proposed transaction arises out of a debt restructuring exercise which
will result in each of Nedbank and Coronation subscribing for 33.5%
shareholding in SA Airlink. SA Airlink is a client of both Nedbank and
Coronation Capital which has, due to the negative effect that the events of 11
September 2001 has had on the aviation industry, received temporary
financial assistance from them. Nedbank and Coronation will each acquire
shares in SA Airlink in order to settle the amounts owed to them and will as a
result of this settlement acquire negative control over SA Airlink as
contemplated in section 12(2)(g) of the Act.
5] Post the transaction the shareholding in SA Airlink is likely to be: 1
Nedbank Ltd (through FBCF) 33.5%
Coronation Capital 33.5%
RA Foster 23%
BJ Webb 10%
6]The merging parties believe that the proposed transaction should strengthen
SA Airlink’s balance sheet and assist it to grow organically.
1 In the event that South African Airways does not accept that the call option for its 10%
shareholding pre the transaction has been validly exercised and it does not follow its rights in
terms of the proposed recapitalization, the parties anticipate that the likely shareholding post
the recapitalization will be:
Nedbank 32.6%
Coronation 32.6%
RA Foster 22.33%
BJ Webb 9.73%
SAA 2.74%
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The relevant market and the impact on competition
7]SA Airlink provides scheduled air services linking smaller communities to the
major hubs in South Africa and the SADC region. FBCF has previously not
traded, Nedbank is a registered bank and Coronation is involved in
investment banking. Although there is no overlap in the activities of the
merging parties both Nedbank and Coronation leases, in terms operating
lease agreements, certain aircraft to SA Airlink. However these arrangements
are made in the ordinary course of their business of financing.
8]The proposed transaction is therefore unlikely to substantially prevent or
lessen competition in any market.
Public interest issues
9]There are no significant public interest issues and no retrenchments are
envisaged as a result of the proposed transaction.
____________________ 17 July 2007
D Lewis Date
N Manoim and Y Carrim concurring.
Tribunal Researcher: R Badenhorst
For the merging parties: Natalie Browne (Cliffe Dekker)
For the Commission: Makgale Mohlala and Marlon Dasarath
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