COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 96/LM/Sep07
In the matter between:
Investec Bank Limited Acquiring Firm
And
Calulo Petrochemicals (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member), N Manoim (Tribunal Member),
and Y Carrim (Tribunal Member)
Heard on : 23 October 2007
Order Issued : 23 October 2007
Reasons Issued: 24 October 2007
Reasons for Decision
Approval
1] On 23 October 2007, the Tribunal unconditionally approved the merger
between the Investec Bank Limited and Calulo Petrochemicals (Pty) Ltd. The
reasons for approving the transaction follow.
The parties
2] The primary acquiring firm is Investec Bank Limited (“Investec”), a company
incorporated in terms of the company laws of the Republic of South Africa.
Investec is controlled by Investec Limited (“Investec Limited”), a public
company listed on the JSE Securities Exchange.
3] Investec has five shareholders that hold at least 5% of its entire issued share
capital. These are the Public Investec Commissioner (with 12.1%
shareholding), Investec Group Staff Share Scheme (with 6.9%),
Entrepreneurial Trust (with 6.4%), Tiso INL Investments (Pty) Ltd (with 6.4%)
and Peu INL (Pty) Ltd (with 5.9%).
4] Investec’s investments that are relevant for the purpose of these reasons are
its 25% shareholding in Calulo Chemicals (Pty) Ltd (“Calchem”), and 35%
shareholding in Chlorcal (Pty) Ltd (“Chlorcal”).
5] The primary target firm is Calulo Petrochemical (Pty) Ltd (“Calulo
Petrochemical”), a company incorporated in terms of the comapny laws of the
Republic of South Africa. Calulo Petrochemical is controlled by Calulo
Investments (Pty) Ltd (“Calulo Investments”).
6] Calulo Investments has three shareholders namely the Ntinga Investment Trust
(holding 75% of the issued shares), MK Diale (holding 25% of the issued
shares) and GP Sequeira (holding 5% of the issued shares). The Ntinga Family
Trust is controlled by Mr. Faku and the Faku Family Trust. The Faku Family
Trust Trust is controlled by three trustees namely Bagcine Sivuyile Ntlabezo,
Mkhuseli Richmond Faku, and Ndudumo Cecil Taleni.
Description of the transaction
7] In terms of the transaction, Investec will acquire 30% of the issued share
capital and minority protection rights in Calulo Petrochemicals. The parties
submitted that as a result of acquiring 30% shareholding, Investec will acquire
joint control in Calulo Petrochemicals.
8] As part of this transaction, Calulo investments will transfer its shareholding in
Calulo Services (Pty) Ltd, Calulo Chemicals (Pty) Ltd and Fuelogic (Pty) Ltd to
Calulo Petrochemicals, the primary target firm in this transaction. In addition,
Calulo Investments will transfer its 17% shareholding in Tosaco (Pty) Ltd to
Calulo Petrochemicals.
Calulo Petrochemicals.
9] The parties further stated that Investec will transfer its 35% shareholding in
Chlorcal to Calchem and its 25% shareholding in Calchem to Calulo
Petrochemicals in exchange for a nominal amount and the right to acquire 30%
2
shareholding in Calulo Petrochemicals.
10] On completion of the transaction, Calulo Petrochemicals will hold 100% of the
issued share capital in each of Calulo Energy, Calchem and Chlorcal. In
addition it will have 70% shareholding in Calulo Services, 18.98% shareholding
in Fuelogic and 17% in Tosaco. Investec will have 30% shareholding with
minority protections rights in Calulo Petrochemicals. The balance of 70% of the
shareholding will be held by Calulo Investments.
Rationale for the transaction
11] The primary acquiring firm has submitted that it is concluding this transaction
for investment purposes.
12] Calulo Investments views this transaction as a growth opportunity, enabling it to
expand its current operations by getting involved in products complementary to
the liquid fuels, primary organic, fine chemicals, plastics and rubber sectors.
The parties’ activities
Primary acquiring firm
13] Investec is a specialist banking group that provides a range of financial
products and services to a niche client base. Investec has a network
comprising various business divisions including investment banking, capital
markets, private client activities, asset management and property activities.
The primary target firm
14] The primary target firm’s activities comprise the activities of the companies
transferred from Calulo Investments to Calulo Petrochemicals. These firms are
Calulo Services, Calchem, Calulo Energy, Tosaco, Chlorcal, and Fuelogic.
Calulo Petrochemicals
15] Calulo Petrochemical is a newly established company which has previously not
traded.
Calulo Services
3
16] Calulo Services is involved in the following activities through its subsidiaries:
[16.1] Calulo Shipping provides a variety of services including tanker ship brokerage
and ship chartering services in respect of petroleum feedstock (crude oil and
condensate), petroleum products (petrol, diesel and jet fuel) and chemicals.
[16.2] Kepu Trading sources, markets and distributes marine fuels (fuel oil and
marine diesel) from South African ports.
[16.3] Calulo Dry Cargo provides ship and container brokerage services in respect
of drybulk cargo.
Calchem
17] Calchem, through its subsidiaries, is involved in the production of chlorine and
caustic soda in Africa. It makes a variety of related chemicals for the water
treatment and chlorine related manufacturing sectors.
18] It also designs, develops, manufactures and supplies chlorinated paraffin;
caustic soda solution, caustic soda flakes, chlorine, hydrogen, hydrochloric
acid, ferrous chloride, sodium hypochlorite, aluminium chloride (“alifloc”),
aluminium chlorohydrate (ACH), alifloc/polymine blends, ACH/polyamine
blends, polyamine (U5100 and U5000) and ferrifloc.
Calulo Energy
19] Calulo Energy is active in the petroleum industry through Tosaco which has a
25% interest in Total South Africa (Pty) Ltd (“Total”), a petrochemical company.
It manufactures and sells a full range of petroleum products including lubricants
and greases, kerosene, jet fuel and liquid petroleum gas.
Fuelogic
20] Calulo Investments and Imperial Logistics formed Fuelogic which is a road
tanker company involved in the transportation of primarily petroleum products.
Competition analysis
4
21] The proposed transaction does not result in any horizontal overlap or vertical
integration as Investec does not have any controlling interest in the sector
where the primary acquiring firm is active. The proposed transaction is
therefore unlikely to substantially prevent or lessen competition in any market.
Public Interest
22] There are no public interest issues.
Conclusion
23] The merger is approved unconditionally.
________________ 24 October 2007
D Lewis DATE
Tribunal Member
N Manoim and Y Carrim concur in the judgment of D Lewis
Tribunal Researcher : R Kariga
For the merging parties: Webber Wentzel Bowens
For the Commission : D Masilela and M Mohlala (Mergers and
Acquisitions)
5