COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: 107/LM/OCT07
In the matter between:
Rickshaw Trade 41 and Invest (Pty) Ltd
and
Tsebo Outsourcing Group (Pty) Ltd
______________________________________________________________________
Panel : N Manoim (Tribunal (Presiding Member) ;
Y Carrim (Tribunal Member) and U Bhoola (Tribunal Member)
Order issued on : 5 December 2007
Reasons decided on : 6 December 2007
______________________________________________________________________
REASONS FOR DECISION
______________________________________________________________________
APPROVAL
[1] On 5 December 2007 the Tribunal issued out an order in which it conditionally approved
the proposed merger between Rickshaw Trade 41 and Invest (Pty) Ltd and Tsebo Outsourcing
Group (Pty) Ltd. The reasons for the decision follow:
THE PARTIES
[2] The primary acquiring firm is Rickshaw Trade 41 and Invest (Pty) Ltd (“Rickshaw”), and
the primary target firm is Tsebo Outsourcing Group (Pty) Ltd (“Tsebo”). Rickshaw is a shelf
company which is a vehicle for the purpose of this proposed transaction, and which does not
control any firm and has not traded.
[3] At present Rickshaw is a wholly owned subsidiary of Roodt Nominees (Pty)
Ltd (“NomineeCo”) which is a nominee for the ultimate shareholders.1
[4] Tsebo is a private company which is controlled by Ethos Private Equity Fund IV (Pty) Ltd
(“Ethos Fund IV”), which is ultimately controlled by Ethos Holdings Ltd (“Ethos Holdings”).
Tsebo controls various firms and is active in food, catering and facilities management. 2
THE TRANSACTION AND ITS RATIONALE
[5] This proposed transaction is pursuant to a nomination agreement entered into between
Rickshaw and Absa Capital. Absa Capital is a division of Absa Bank Ltd, which is a wholly
owned subsidiary of Absa Group and is controlled by Barclays Plc. In terms the nomination
agreement between these parties, Rickshaw through NomineeCo will purchase the entire
issued share capital of Tsebo.
[6] For their own commercial reasons the merging parties decided to structure this
transaction in two stages. In the first stage, Rickshaw whilst still controlled by a nominee
company will purchase the target firm. In the second stage, the shares in Rickshaw will be
transferred in the following manner:
1) 49.9% to Absa Capital;
2) 20% to the members of management via three Trusts created for their
exclusive benefit;
3) 30.1% to a nominee company, (it is intended that not less than 30% will
be
transferred to one or more black economic empowerment parties
nominated
by Absa Capital, and the balance of up to 0.1% to other investment
consortium members to be nominated by Absa Capital).
[7] Given the shareholding that will emerge in the second stage, the merged
company can be considered to be controlled either solely by Absa Capital or jointly by
Absa Capital together with one of the other shareholders.
[8] At the hearing the Tribunal recommended that the second stage of this transaction be
implemented, and clearly set out, before this merger could be approved, hence the conditions
implemented, and clearly set out, before this merger could be approved, hence the conditions
1 The merging parties pointed out at the hearing that NominneCo has no economic interest
in this proposed transaction and does not as the Commission erroneously pointed out, act
under the direction of Absa Capital as Absa Capital’s nominee
2 These include Tsebo Holding and Operations (Pty) Ltd; Fedics Strategic Investments
(Pty)Ltd; Drake and Scull Facilities Management (SA) (Pty)Ltd; Kraal Kraft (Pty) Ltd; and
Invalu (Pty) Ltd
which are attached to the approval of this merger.
THE RELEVANT MARKET AND COMPETITION EVALUATION
[9] It is common cause that Absa Capital has no interest in the business activities of Tsebo.
For this reason this merger does not lead to any horizontal or vertical concerns.
CONCLUSION
[10] This proposed merger does not have any negative effects on employment nor does it
raise any public interest issues. Conditions have been attached for the sole reason to provide
lucidity as to what the Tribunal has approved particularly in light of the implementation of the
second stage of the proposed transaction as was anticipated by the merging parties.
_______________ __________________
N Manoim 6 December 2007
Presiding Member
Concurring: Y Carrim and U Bhoola
Tribunal Researcher: L. Xaba
For the Commission : I Selaledi
Mergers and Acquisitions
For the merging parties : Webber Wentzel Bowens