COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 61/LM/Jun07
In the matter between:
Platoon Trade and Invest 136 (Pty) Ltd Acquiring Firm
And
PG Bison Components (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member), N Manoim (Tribunal Member), L
Reyburn (Tribunal Member)
Heard on : 1 August 2007
Order issued on: 1 August 2007
Reasons Issued: 9 November 2007
Reasons for Decision
Approval
1] On 1 August 2007, the Tribunal unconditionally approved the merger between
Platoon Trade Invest 136 (Pty) Ltd and PG Bison Components (Pty) Ltd. The
reasons for approving the transaction follow.
The parties
2] The primary acquiring firm is Platoon Trade and Invest 136 (Pty) Ltd
(“Platoon”), a private company incorporated in terms of the company laws of
the Republic of South Africa. Platoon is a company wholly owned by ABSA
Capital (“ABSA Capital”, a division of ABSA Bank Limited (“ABSA Bank”).
ABSA Bank is controlled by ABSA Group Limited (“ABSA Group”). ABSA
Group is a public company listed on the JSE Securities Exchange. The main
shareholders of ABSA Group are Barclays plc (with a 56.6% shareholding), Old
Mutual Asset Managers (with a 5.4% shareholding), Allan Gray Limited (with a
4.5% shareholding), Investec Asset Management (Pty) Ltd (with a 4.2%
shareholding) and Public Investment Corporation Limited(with a 4.0%). ABSA
Group exercises control over several subsidiaries. 1
3] After the implementation of the transaction, shares in Platoon will be held by
ABSA Capital (with a 49% shareholding), Management/Manco 2 (with a 30%
shareholding), and a nominee company for a BEE partner to be identified (with
a 21% shareholding). ABSA, Manco, and the nominee company are collectively
referred to as the “AC Consortium”.
4] Platoon is a newly incorporated company that has not previously traded and as
a result, does not control any firm.
5] The primary target firm is PG Bison Components (Pty) Ltd (“PG Bison”), a
private company incorporated in terms of the laws of the Republic of South
Africa. PG Bison is ultimately controlled by Steinhoff Africa Holdings (Pty) Ltd
(“Steinhoff”),3 which is a subsidiary of Steinhoff International Holdings Limited
(“Steinhoff International”). Steinhoff International is a public company listed on
the JSE Securities Exchange. No single shareholder controls Steinhoff
International. The shareholders of Steinhoff International who hold at least 5%
are RMB Asset Management and funds administered by them (with a 12.7%
shareholding), BS Beteiligungs und Verwaltungs GmBH (with a 9.3%
shareholding), Fidelity International Limited (US, LU, UK, and CA) (with an
8.75% shareholding), Investec Asset Management (with a 7.75%
shareholding), and Stanlib Limited (with a 5% shareholding).
6] PG Bison does not control any firm.
Description of the transaction
7] The transaction is effected through a number of steps which can be
1 ABSA Group’s subsidiaries include ABSA Consultants and Actuaries (Pty) Ltd, ABSA Trust
1 ABSA Group’s subsidiaries include ABSA Consultants and Actuaries (Pty) Ltd, ABSA Trust
Limited, ABSA Healthcare Consultants (Pty) Ltd, ABSA Stockbrokers Consultants (Pty) Ltd,
ABSA Portfolio Managers (Pty) Ltd, ABSA Fund Managers Limited, and ABSA Mortgage Fund
Managers (Pty) Ltd. The rest of ABSA’s subsidiaries are listed on p89 of the shareholders’
report for ABSA Group attached as Schedule 3.1.
2 Now called Nebaverst 11 (Pty) Ltd.
3 PG Bison is controlled by PG Bison Limited which is controlled by PG Bison Holdings (Pty)
Ltd which is in turn, controlled by Steinhoff Africa Holdings (Pty) Ltd.
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summarised as follows:
[7.1] As part of this transaction, the furniture business, the import business
(including the bedding and furniture manufacturing divisions) will be transferred
into PG Bison. In addition, Bekker and Steyger (Pty) Ltd (“Bekker and Steyger”)
and Roadway Logistics Retail (Pty) Ltd (“Roadway Logistics”) – (collectively
referred to as the Steinfurn subsidiaries) will be transferred into PG Bison.
[7.2] Platoon will purchase the furniture business, import business, the
Steinfurn subsidiaries and the Property Rental Business from PG Bison.
[7.3] At the completion of this transaction, Platoon will be controlled by the
AC Consortium and Platoon shall house the furniture business, import
business, the Steinfurn subsidiaries and the Property Rental Business
purchased from PG Bison, a subsidiary of Steinhoff.
Rationale for the transaction
8] For the primary acquiring group, the merger presents certain strategic initiatives
that can be implemented through Platoon, including BEE transactions that can
significantly improve the furniture business, the import business and the
roadway logistics business.
9] The shareholders of the primary target firm submitted that their strategy is to
diversify into other markets as it will improve their operational level and helps
them to introduce a number of initiatives to improve profitability.
The parties’ activities
Primary acquiring firm
10] The primary acquiring group is actively involved in the provision of merchant
banking, corporate banking and treasury products to the corporate market.
The primary target firm
11] The primary target group is involved in the following business activities through
different divisions:
[11.1] Manufacturing of furniture brands including: Gommagomma, Grafton Everest,
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Alpine Lounge, High Point, Steinhoff Bedding, Milano D écor, Victoria Lewis,
among others;
[11.2] Furniture Logistics division which is deals with roadway logistics and regional
distribution centre;
[11.3] The import subdivision which imports lounge furniture, bedroom and dining
room suits to supplement the locally manufactured ranges.
Competition analysis
12] There is no horizontal overlap in the products of the parties and there is no
vertical integration resulting from this transaction.
13] The Commission was concerned that Steinhoff may be able to control Manco
whether directly or indirectly since it is providing funding for Manco to
participate in this transaction. This funding is being provided through the
subscription for redeemable preference shares in Manco by Steinhoff. The
parties submitted that Steinhoff does not in any way control Manco and that the
funding is at arm’s length and will be on commercial terms. 4 The parties further
stated that neither the funding nor the preference shares terms will enable
Steinhoff to control Manco’s 30% shareholding in Platoon. 5 In light of these
submissions, we did not consider the effects on competition should Steinhoff
exercise control of Manco’s 30% shareholding in Platoon.
14] The proposed transaction is related to the Steinhoff/BCM6 transaction involving
Steinhoff and BCM Holdings (Pty) Ltd, International Wire Converters (Pty) Ltd
and Buffalo Freight Systems (Pty) Ltd. The Steinhoff/BCM transaction was
approved subject to the condition that this transaction is implemented. This
stems from the fact that the competition concerns that may have been raised
by the Steinhoff/BCM transaction have been removed by the current
transaction since Steinhoff is selling its furniture business, including the
bedding manufacturing business.
4 See record page 520
5 See record page 522.
6 Tribunal Case number 35/LM/Apr07.
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Public Interest
15] There are no public interest issues.
Conclusion
16] The merger is approved unconditionally.
________________ 9 November 2007
N Manoim DATE
Tribunal Member
U Bhoola and M Mokuena concur in the judgment of N Manoim
Tribunal Researcher : R Kariga
For the merging parties: Roodt Incorporated
For the Commission : G Mudzanani and HB Senekal (Mergers and
Acquisitions)
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