COMPETITION TRIBUNAL OF SOUTH AFRICA
Case NO: 82/LM/Jun08
In the matter between
Hosken Consolidated Investments Ltd Primary Acquiring firm
And
Seardel Investment Corporation Ltd Primary Target Firm
Panel :D Lewis (Tribunal Member), N Manoim (Tribunal Member) and Y
Carrim (Tribunal Member)
Heard on : 3 September 2008
Decided on : 3 September 2008
Reasons Issued : 18 September 2008
Reasons for Decision
Approval
[1] On 3 September 2008 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between Hosken Consolidated Investments Ltd and
Seardel Investment Corporation Ltd. The reasons appear below.
Transaction and parties
[2] Hosken Consolidated Investments Ltd (“HCI”) is acquiring more than 50% of the
shares and voting rights in Seardel Investment Corporation Ltd (“Seardel”), pursuant to
which HCI will control Seardel. Both HCI and Seardel are public companies listed on the JSE
Securities Exchange.
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[3] HCI’s largest shareholder is the South African Clothing and Textiles Workers’ Union
(“SACTWU”), which owns 40.19% of the share capital in HCI. HCI controls in excess of 40
subsidiaries.
[4] Seardel is controlled by Dr A Searll who, through various entities holds 62.9% of the
share capital. Seardel controls in excess of 20 subsidiaries.
Rationale for the Transaction
[5] According to the merging parties Seardel has experienced a decline of 97% in profits
due to difficult trading conditions in the South African textile and clothing industry. In light of
this HCI has offered to rescue the company which it believes it can turn around and in time
extract profit from. This transaction therefore provides Seardel with a way to continue
operating.
Competition Analysis
[6] Seardel is a vertically integrated clothing and textile manufacturer which is also
involved in the production and distribution of office automation and consumer electronics, as
well as the manufacturing and distribution of toys, games and stationary.
[7] HCI is an investment company involved in a broad range of sectors such as m edia
and broadcasting, casinos, hotels and leisure, transport, energy food and beverages,
industrial, financial services, property and technology, none of which overlaps with the target
firm’s businesses.
[8] The transaction is therefore unlikely to result in a substantial lessening of competition
in any of the markets identified above.
Public interest issues
[9] The merging parties have indicted to the Commission that there might be some job
losses as a result of the transaction. However, in light of the fact that SACTWU, the Union
that represents most of the workers in Seardel, is also the largest shareholder in HCI, the
Tribunal is confident that any issues regarding employees would be addressed in a
responsible manner.
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Conclusion
[10] Based on the above we find that the transaction will not result in a substantial
lessening or prevention of competition and is accordingly approved unconditionally.
___________________ 18 September 2008
D Lewis Date
Tribunal Member
N Manoim and Y Carrim concurring
Tribunal Researcher : R Badenhorst
For the merging parties : Edward Nathan and Sonnenbergs
For the Commission : M Mohlala and M Matsimela
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