COMPETITION TRIBUNAL OF SOUTH AFRICA
Case NO: 49/LM/Apr08
In the matter between
RZT Zelphy 4975 (Pty) Ltd Primary Acquiring firm
And
Davita Trading (Pty) Ltd Primary Target Firm
Panel : D Lewis (Tribunal member); N Manoim (Tribunal member) and
U Bhoola (Tribunal member)
Heard on : 09 July 2008
Decided on : 09 July 2008
Reasons Issued : 18 September 2008
Reasons for decision
Approval
[1] On 09 July 2008 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between RZT Zelphy 4975 (Pty) Ltd and Davita
Trading (Pty) Ltd unconditionally. The reasons for the approval appear below.
Parties
[2] The primary acquiring firm is RZT Zelphy 4975 (Pty) Ltd (“Zelphy”). Zelphy is
controlled by RZT Zelphy 4976 (Pty) Ltd (“RZT”). RZT is in turn controlled by Corvest
6 (Pty) Ltd (“Corvest 6”). Corvest 6 is a subsidiary of RMB Corvest (Pty) Ltd (“RMB
Corvest”). RMB Corvest is controlled by RMB Private Equity (Pty) Ltd (“RBM Private
Equity”), which is, in turn, controlled by FirstRand Bank Holdings Ltd (“FirstRand
Bank”).
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[3] The primary target firm is Davita Trading (Pty) Ltd (“Davita”), a company
incorporated in accordance with the laws of the Republic of South Africa. Davita is
jointly controlled by David Desilet and Brian Desilet with each holding 50% of the
shares. David and Brian Desilet control Desilets Investments CC (“Desilets
Investment”).
Transaction
[4] In terms of the structure of the proposed transaction, Zelphy will acquire the
business of Davita together will the immovable property of Desilets. Simultaneously
with this acquisition, David Desilet, Brian Desilet and RZT will acquire shares in
Zelphy.
[5] The shares in Zelphy will be held as to 20% by David Desilet, 20% by Brian
Desilet and 60% by RZT. The shares in RZT will be held as to 90% by Corvest 6,
8.5% by new members of the management and 1.5% by Jan Hugo.
Rationale
[6] The parties submit that Corvest 6 is a private equity company and the
acquisition of a stake in RZT provides it with an opportunity to invest in a potentially
high-growth business.
[7] The rationale from the sellers’ perspective is that Brian Desilet wishes to exit
the business and retire within the next 12 months. As a consequence, David Desilet
has elected to adopt a less active role regarding the business, with a view to retiring
within the next 2 to 3 years.
Parties Activities
[8] Both Zelphy and RZT are newly established companies. Zelphy has been
established for purposes of this transaction and RZT was established for purposes of
acquiring shares in Zelphy. Corvest 6 is a private equity vehicle being used to invest
in RZT. RBM’s private equity vehicles, i.e. RBM Ventures and RMB Corvest invest in
high-growth and mainly unlisted companies. RMB Corvest provides services such
as, inter alia, unsecured shareholder funding, funding management buy-out and buy-
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ins, new acquisitions funding for successful, growing companies, BEE consortium
funding etc.
[9] The FirstRand group 1 provides a comprehensive range of financial services
products to the South African market (i.e. individuals, commercial clients, corporate
and public entities) and niche products in certain international markets. These
products include, inter alia, banking services, corporate advisory, structured finance
project finance and private equity, multi-management of hedge funds and investment
services, short-term insurance as well as asset management.
[10] Davita manufactures and distributes powdered food stock and powdered drink
products for African markets, excluding South Africa. Davita’s main products are
Benny stock powder, Jolly jus powdered drink, Davita flavoured drink, Dezzy bubble
gum. None of these products are sold in South Africa.
Competition analyses
[11] There is no overlap between the activities of the merging parties as the
acquiring group is not active in the business of manufacturing and distributing
powdered food stock products and powdered drink products where the target firm is
active.
Public interest
[12] The transaction does not give rise to any public interest issues and is
approved without conditions.
___________________ 18 September 2008
D Lewis Date
Tribunal Member
Concurring: N Manoim and U Bhoola
1 The group includes First National Bank, Wesbank, Rand Merchant Bank and Momentum.
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Tribunal Researcher : I Selaledi
For the merging parties : Bowman Gilfillan Inc.
For the Commission : Xolela Nokele (Mergers and Acquisitions)
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