COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 82/LM/Aug07
In the matter between
Red Pen 2 General Trading (Pty) Ltd Acquiring Firm
And
Primedia Ltd Target Firm
Panel : D Lewis (Presiding Member), N Manoim (Tribunal Member)
and Y Carrim (Tribunal Member)
Heard on : 05 September 2007
Decided on : 05 September 2007
Reasons Issued : 22 October 2007
REASONS
Approval
[1] On 08 August 2007 the Competition Tribunal issued a Merger Clearance Certificate
approving the merger between Red Pen 2 General Trading (Pty) Ltd and Primedia Ltd
unconditionally. The reasons appear below.
Parties
[2] The acquiring firm is Red Pen 2 General Trading (Pty) Ltd (“Newco”). Newco is a
shelf company, established specifically for the purposes of the proposed transaction.
[3] The target firm is Primedia Ltd (“Primedia”). Primedia controls a range of radio
stations and other media companies. 1 Primedia is controlled by the Mine Workers
Investment Company (Pty) Ltd (“MIC”) and the Kirsh Consortuim (“Kirsh Consortium”) by
virtue of a voting pool agreement concluded between them in March 2000. 2
Rationale for the Transaction
1 Primedia operates the following divisions: Advertising division, Filmed entertainment division and Onetoone
marketing division .
2 Primedia is a media company that controls a range of radio stations and other media companies.
1
[4] The transaction involves a buyout of the Primedia Group, necessitating a
restructuring thereof and a consequential delisting of Primedia from the JSE Limited. Post
merger, direct control over Primedia Group will vest in Newco. Newco in turn will ultimately
be controlled by the Kirsh Consortium and MIC by virtue of a shareholders’ agreement. 3
[5] The parties have submitted that the proposed transaction will increase broadbased
management participation in Primedia through the acquisition by approximately 55 members
of the incumbent Primedia management of an equity stake in Primedia. The parties further
submitted that the transaction will significantly increase Black Economic Empowerment
(“BEE”) shareholding in the restructured Primedia Group, thereby improving the group’s BEE
status.
Competition Analysis
[6] In our view the proposed transaction merely involves a restructuring of ownership
interest in Primedia. The implementation of the transaction will leave the competitive
landscape unchanged. In addition, the transaction does not raise any public interest
concerns.
Conclusion
[7] Based on the above the transaction is accordingly approved unconditionally.
___________________ 22 October 2007
Y.Carrim Date
Tribunal Member
N Manoim and D Lewis concurring
Tribunal Researcher : J Ngobeni
For the merging parties : Edward Nathan Sonnenberg
For the Commission : HB Senekal (Mergers and Acquisitions)
3 Post merger Primedia will be owned by Newco. Newco will ultimately be controlled by the Kirsh
Consortium holding 18.5% shares; MIC holding 40%; Remaining Kirsch Consortium holding 12.8%
shares and Management and Employees will hold 28.6%.
2