CASE NO: 67/LM/Jun08
In the matter between:
DUFERCO INVESTMENT PARTNERS INC. Acquiring Firm
and
HIGHVELD STEEL Target firms
______________________________________________________________________
Panel : N Manoim (Presiding Member), Y Carrim (Tribunal Member), and
U Bhoola (Tribunal Member)
Heard on : 14 August 2008
Order issued on : 15 August 2008
Reasons issued on : 17 September 2008
REASONS FOR DECISION
Introduction
1. On 15 August 2008 the Tribunal approved the merger between Duferco
Investment Partners Inc. and Highveld Steel.
Background
2. This proposed transaction flows from the previous Tribunal decision on 26 April
2007, in which the Tribunal conditionally approved the acquisition by Evraz
Group SA of a controlling interest in Highveld Steel and Vanadium Corporation
Limited1, following the European Commission’s (EC) decision 2 in which certain
1 Case No.: 04/LM/Jan072 Case Comp/M.4494 Evraz Highveld. At the time of the Tribunal’s conditional approval, the EC had
already approved the transaction subject to conditions.
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conditions were imposed on the parties to engage in a partial divestiture of the
Mapochs mine and the divestiture of vanadium business. The present transaction
represents the merging parties’ effort to comply with the divestiture.
The Transaction and Rationale
3. The primary acquiring firm is Duferco Investment Partners Inc. (“DIP”) 3 which
intends to acquire the primary target firms; Vanchem business of Highveld Steel
& Vanadium Corporation Limited 4 (“Highveld”); 350 “A” ordinary shares in
Mapochs Mine (Proprietary) Limited5 with limited rights; as well as 50% interest
in South Africa Japan Vanadium (Proprietary) Limited (“SAJV”)6.
Activities of the parties
4. DIP currently has no active investments. DSP is active in the production of steel
products. Vanchem Operations and SAJV are active in the vanadium industry in
which they produce and sell ferrovanadium.7
Competition Evaluation
5. There is no horizontal overlap in the activities of the parties, and no vertical
relationship which arises between the parties in South Africa.
3 DIP is Duferco Group’s private investment company. Duferco group of companies will provide support
to DIP in the implementation of this proposed transaction. Duferco group’s ultimate parent company is
Duferco Participation Holdings Limited (“DPH”). In South Africa, Duferco Steel Processing (“DSP”) is
the only company within the Duferco Group (50% owned by Duferco and the Industrial Development
Corporation (“IDC”).4 The Vanadium operations comprise of the whole vanadium business; its employees, all property, all
liabilities, and fixed assets (including the ferrovanadium smelter located at Highveld’s iron and steel
operation sites).5 Mapochs is a wholly owned subsidiary of Highveld. The parties are of the view that this transaction
will not result in control of Mapochs, and thus Mapochs should not be considered as a target firm in this
transaction. 350 “A” ordinary shares in Mapochos comprise one vote each in the shareholder’s
transaction. 350 “A” ordinary shares in Mapochos comprise one vote each in the shareholder’s
meeting, veto rights in relation to any shareholders’ resolution that my affect the ore fines supply to
VVP and right to appoint one board member (that board member will have a veto right in relation to
any board resolution that may affect the ore fines supply to VVP).6 SAJV is a joint venture between Highveld (50%), Nippon Denko Company Limited (40%) and Mitsui
Company Limited (10%)7 Ferrovanadium is used in steel applications. However the parties submitted that SAJV sells exclusively
into Japan, and Vanchem operations sells exclusively to Alcan Pechiney in North America and Johnson
Matthey in South Africa.
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6. Since the transaction has also been notified to the EC, we asked the parties and
the Commission whether there are any issues or concerns which have been
raised in that jurisdiction. The parties submitted that the EC has approved
Duferco as the acquiring firm in the proposed transaction, and accepted the
proposed transaction as consistent with the commitments issued by them. 8 This
was confirmed by the Commission.
Conclusion
7. In the foregoing, we find that this merger will not result in substantial lessening
or prevention of competition in the relevant markets and that it constitutes
compliance with our divestiture order. Accordingly, we approve the merger
without conditions.
8. There are no public interest issues.
_______________ 17 September 2008
N Manoim Date
Tribunal Member
Y Carrim and U Bhoola concur in the judgment of N Manoim
Tribunal Researcher: L Xaba
For Dufferco : White & Case Attorneys
For Highveld : Werkmans Attorneys
For the Commission : K Mahlakoana
(Mergers and Acquisitions)
8 At the time we heard the proposed transaction, the EC had not issued their final approval although it
was confirmed that they considered the proposed transaction unlikely to create competition concerns
as Duferco was not currently active in the vanadium industry.
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