IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
CASE NO: 108/LM/OCT07
In the matter between:
CALSHELF INVESTMENTS 152 (PROPRIETARY) LIMITED Acquiring Firm
And
ORLEY FOODS (PROPRIETARY) LIMITED Target firms
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Panel : DH Lewis (Presiding Member), Y Carrim (Tribunal Member), and
M Mokuena (Tribunal Member)
Heard on : 12 December 2007
Order issued on : 12 December 2007
Reasons issued on : 12 December 2007
REASONS FOR DECISION
THE PARTIES
[1] The primary acquiring firm is Calshelf Investments 152 (Proprietary) Limited (“Calshelf 152”) a
new shelf company which is a subsidiary of Liberty Star Consumer Holdings (Pty) Limited (“Libstar”). 1
Libstar controls various firms namely: Chet Chemical Products (Pty) Limited; Dickon Hall Foods (Pty)
Limited; Liberty Star Food Solutions (Pty) Limited; Gourmet Consumer Holdings (Pty) Limited, which
controls Rialto Foods (Pty) Limited; and Retailer Brands (Pty) Limited.
[2] The acquiring firms have interests mainly in the foods sector. Dickon Hall
manufactures, packages and distributes “dry” and “wet” food products; Gourmet
1 There are other acquiring firms to this transaction which include Royal Bafokeng Libstar
(Pty) Ltd (“RBH Libstar”); Lereko Metier Capital Growth Fund (“LMCGF); Royal Bafokeng
Holdings (Pty) Ltd (“RBH”); RBH Industrial Holdings (Pty) Ltd (“RBH Industrial”) and; The
Bofokeng Nation (“RBN”)
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Consumer Holdings imports specialty French, Italian and Spanish foodstuffs; Retailer
Brands distributes jelly, spices, instant soup, spicy sauces and corn flour. The
acquiring firms supply their products throughout South Africa, but primarily provide
their services to members of their group, and not to third parties.
[3] The primary target firm is Orley Foods (Pty) Ltd (“Orley Foods”) which is controlled by
Orley Holdings (Pty) Ltd (“Orley Holdings”). Orley Holdings is jointly controlled by two Trusts:
the Grandi Trust (“Grandi”) and the SMA Trust (“SMA”).
[4] Orley Foods manufactures a wide range of ingredients for the retail, wholesale, food
service and manufacturing sectors of the economy which includes chocolate products, syrups
and sugar based products, nondairy whips, toppings and panned and coated products. These
products are distributed throughout South Africa.
THE TRANSACTION
[5] This proposed transaction is pursuant to a sale of business agreement entered into by
the merging parties on 24 July 2007, in which Calshelf 152 through Libstar, will purchase Orley
Foods’ entire business as a going concern. Simultaneously Calshelf 152, Grandi, SMA and the
two managing directors of Orley Foods, namely; Abrahams and Janik, entered into a
shareholders agreement, in which joint control of the Calshelf 152 was conferred on Libstar,
Grandi and SMA, and in which during 1 January 2009 and 2010, Libstar has a call option
entitling it to acquire the interests of Grandi and SMA in Calshelf 152. During the same period,
Grandi and SMA have put an option against Libstar which entitles them to dispose of their
interests in Calshelf 152 to Libstar.
[6] The merging parties submitted that the purpose of these shareholder arrangements is to
enable the business of Orley Foods to be continued by Calshelf 152 under the management of
Abrahams and Janik, through Grandi and SMA.
Abrahams and Janik, through Grandi and SMA.
[7] As a result of the implementation of the proposed transaction, Calshelf 152 will remain
the subsidiary of Libstar which will hold 70% of the equity in Orley Foods, and Calshelf 152 will
be jointly controlled by Libstar, Grandi and SMA, where Grandi and SMA will together hold 30%
of the equity in Calshelf 152.
RATIONALE FOR THE TRANSACTION
[8] According to the merging parties, this transaction is a complementary fit which will allow
Orley Foods to broaden its market range by participating in the acquiring firms’ food
solutions/outof home platform, and further enable it to achieve a favourable BEE status. For
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the acquiring firms, this transaction provides an opportunity to increase their scale, as well as
improve the quality of earnings and asset base.
COMPETITION EVALUATION
[9] The products manufactured by the acquiring firms do not in any way overlap or compete
with any of the products manufactured by Orley Foods. Furthermore Orley Foods does not
supply any products to any of the acquiring firms nor do any of the acquiring firms supply any
products to Orley Foods. Consequently this merger does not raise any horizontal or vertical
concerns.
CONCLUSION
[10] We find that this proposed merger is unlikely to substantially prevent or lessen
competition in any market. Furthermore, no negative effects on employment will result, and no
significant public interest concerns are raised. Accordingly the proposed transaction is
unconditionally approved.
_______________ 12 December 2007
D Lewis Date
Tribunal Member
Y Carrim and M Mokuena concur in the judgment of D Lewis
Tribunal Researcher: L Xaba
For the merging parties : Metier, and Libstar
For the Commission : I Mohlala, and L Khumalo
(Mergers and Acquisitions)
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