COMPETITION TRIBUNAL SOUTH AFRICA
Case NO: 128/LM/Dec08
In the matter between:
African Revival Investments Holdings (Pty) Ltd Acquiring Firm
And
Siyahamba Engineering (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member); U Bhoola (Tribunal Member) and N
Manoim (Tribunal Member)
Heard on : 25 March 2009
Decided on : 25 March 2009
Reasons Issued on : 13 May 2009
Reasons for Decision
Approval
[1] On 25 March 2009 the Competition Tribunal issued a Merger Clearance Certificate
unconditionally approving the merger between African Revival Investment Holdings (Pty) Ltd
and Siyahamba Engineering (Pty) Ltd. The reasons appear below.
Parties
[2] The acquiring firm is African Revival Investment Holdings (Pty) Ltd (“ARIH”)1, a
company incorporated in accordance with the laws of the Republic of South Africa. ARIH is
directly controlled by the African Revival Holdings Ltd with 70% share (“ARH”) 2 and Investec
Bank Ltd3 with 30% shares.
[3] The primary target firm is Siyahamba Engineering (Pty) Ltd (“Siyahamba”) a
company incorporated in accordance with the laws of the Republic of South Africa.
Siyahamba is not controlled by any single shareholder. 4 Siyahamba controls Siyahamba
Automotive SA (Pty)Ltd; Abahle Investments (Pty)Ltd; Reyapele Investments (Pty)Ltd
1 ARIH controls Maqeks Investments (Pty)Ltd; Clidet No 779 (Pty)Ltd; Innovative Sanitary Solutions and Zoza
investments (Pty)Ltd. ARIH also has a non controlling interest in Mitsui & Co Railway Solutions (Pty)Ltd (“Mitsui”)
and Venus Railway Solutions (Pty)Ltd (“Venus”).2 ARH is an investment holding company with interest in firms that supply electrical locomotives, industrial
machines, tools and consumables. 3 Investec Bank is a specialist banking group that provides a diverse range of financial products and services to a
niche client base. Investec Bank controls several subsidiaries, including DCD Dorbyl (Pty) Ltd (“DCD Dorbyl”).4 Siyahamba’s shareholders are: African Revival Investments 36%; Mendo Holdings 26%; Shiela Ngubane 13%;
Paulo Jorge 10%; Henk de Milander 10% and Zarina Maharaj 5%. Siyahamba has an indirect no-controlling
interest in several firms, including DCD Dorbyl.
1
(“Reyapele Investments”)5; Nustart Property Holdings (Pty)Ltd and Nustart Property Holdings
Two (Pty)Ltd.
Transaction
[4] In terms of the proposed transaction, ARIH intends to acquire a further 17% of the
issued share capital in Siyahamba from Mendo Holdings (“Mendo”) such that ARIH’s existing
36% shareholding will increase to 53% post merger.
Rationale for the Transaction
[5] ARIH sees the proposed transaction as an opportunity to invest in a business with a
sound financial history and a favourable outlook. Mendo (the seller) wishes to divest itself of
part of its shareholding in Siyahamba in order to realise part of its investment and hence
gain access to needed capital.
Parties Activities
[6] ARIH holds a diverse portfolio of interest in a number of firms. ARIH itself does not
sell any products or render any services. However ARIH’s interests include the supply of
plumbing material and sanitary ware (“Plumblink”) radio telecommunication services
(“Fleetcall”) and transportation of fast moving consumer goods and warehouse management
(“Vital Distribution Solutions”). ARH is an investment holding company with interest in firms
that supply electrical locomotives, industrial machines, tools and consumables. These firms
are Allied Putzinger (Pty) Ltd trading as Toolquip, F&H Machine Tools (Pty) Ltd (“F&H
Machine”), Mitsui and Venus.6
[7] Siyahamba is primarily a designer and manufacturer of railway coach and locomotive
components. In particular it designs and manufactures train doors, door gears for train doors
and train windows.
5 Reyapele Investments has 34% share in DCD Dorbyl.
6 Toolquip sells cutting tools, abrasives, tooling, accessories and basic measuring equipment. F&H Machine
provides high quality hi-tech conventional and computer numeric controlled machine tools for use in all sectors of
the metal working industry. Mitsui and Venus are involved in the supply of and the refurbishment of certain
locomotive engines to and for Spoornet.
2
Competition Analysis
[8] The Commission found that the proposed transaction does not result in any product
overlap. According to the Commission this is a move from non controlling minority
shareholding to majority shareholding. The Commission submits that the proposed
transaction involves players that have shares in entities that are involved in the broad rail
industry.7 During its investigations the Commission was concerned about this cross-
shareholding by Investec and ARH. As a result of this the Commission analysed whether
ARH’s minority shareholding in Mitsui and Venus gives it any form of control. The
Commission found that their shareholding does not give them any form of control, and
therefore the Commission did not assess the activities of Mitsui and Venus in this
transaction. The Commission however did examine the activities of Siyahamba and DCD
Dorbyl and it came to the conclusion that there are no overlaps in their activities. We
therefore agree with the Commission’s conclusion that the proposed transaction is unlikely to
substantially prevent or lessen competition.
Conclusion
[9] There are no public interest issues and accordingly the transaction is unconditionally
approved.
___________________ 13 May 2009
N Maniom Date
Tribunal Member
D Lewis U Bhoola concurring
Tribunal Researcher : Jabulani Ngobeni
For the merging parties : Edward Nathan Sonnenbergs
For the Commission : Makgale Mohlala (Mergers and Acquisitions)
7 From the acquiring side, ARH has indirect shareholding (through ARIH) in Siyahamba, the primary target firm.
ARH also has minority shareholding in Mitsui and Venus, entities involved in the supply of certain electric
locomotive engines to Spoornet. Investec, a joint controller of the primary acquiring firm, is also has indirect
shareholding (through Africa Revival Investments) in Siyahamba. Investec also controls DCD Dorbyl, which is
active in the rail industry as a manufacturer of bogies used in trains; couplers, which joins train carriages as well
as assembly of locomotive diesel engines. The target firm Siyahamba is also involved in the rail industry as a
designer and manufacturer of train doors, door gears for train doors and train windows and it also has indirect
shareholding in DCD Dorbyl.
3