COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 44/LM/Aug10
In the matter between:
Depfin Investments (Pty) Ltd Acquiring Firm
And
Ixia Coal Funding (Pty) Ltd Target Firm
Panel : Norman Manoim (Presiding Member)
Andreas Wessels (Tribunal Member)
Yasmin Carrim (Tribunal Member)
Heard on : 01 September 2010
Order issued on : 01 September 2010
Reasons issued on : 15 October 2010
Reasons for Decision
Approval
1] On 01 September 2010, the Competition Tribunal (“Tribunal”) approved
the transaction involving Depfin Investments (Pty) Ltd and Ixia Coal
Funding (Pty) Ltd. The reasons for approval follow below.
The merging parties and their activities
2] The primary acquiring firm is Depfin Investments (Pty) Ltd (“Depfin”), a
private company and wholly owned subsidiary of Nedbank Ltd, which in
turn is a wholly owned subsidiary of Nedbank Group Ltd. Nedbank
1
Group Ltd is a bank holding company and its principal banking
subsidiary is Nedbank Ltd. The group offers a wide range of wholesale
and retail banking services.
3] The primary target firm is Ixia Coal Funding (Pty) Ltd (“ICF”), a private
company. ICF is currently a non-trading and non-operating company
and it does not currently control and firms. After this transaction it will
be an investment holding company.
4] ICF’s stated objective, as per the memorandum of association is
“only ... to invest solely in Sasol Mining (Proprietary) Limited ” (“Sasol
Mining”) (see proposed transaction below). According to the merging
parties, this shareholding in Sasol Mining will not afford ICF any rights
that will constitute joint control of Sasol Mining.
The proposed transaction
5] The proposed transaction relates to the financing of a special purpose
entity within a broader BEE transaction. As part of a BEE initiative (“the
BEE Transaction”), Sasol Limited has established Ixia Coal (Pty) Ltd
(“Ixia Coal”) as a vehicle of empowerment.
6] For the purposes of the BEE Transaction, Sasol Limited has
incorporated Sasol Mining Holdings (Pty) Ltd (“Sasol Mining Holdings”)
as its wholly held subsidiary, to which it will sell and transfer its 100%
shareholding in Sasol Mining, which is a sole and joint operator of a
number of coal mines.
7] In terms of the BEE Transaction –
i) Sasol Mining Holdings will hold 49% of the issued ordinary
share capital in Ixia Coal;
ii) WIPCoal (Pty) Ltd, the BEE shareholder, will hold the remaining
51% of the issued ordinary share capital in Ixia Coal;
iii) Ixia Coal will in turn, through ICF, a wholly held subsidiary,
acquire a non-controlling 20% shareholding in Sasol Mining; and
2
iv) Sasol Mining Holdings will also directly hold 80% of the issued
ordinary share capital of Sasol Mining.
8] Relevant to the current notification is that the BEE Transaction will be
funded through the issue of preference shares by ICF to Sasol Mining
Holdings and Depfin. In terms of the proposed transaction, Depfin will
subscribe for redeemable preference shares in ICF. On completion of
the proposed transaction, Depfin’s subscription for A preference shares
in ICF will constitute more than 50% of the total issued share capital of
ICF.1
The rationale for the proposed transaction
9] ICF is incorporated as a special purpose entity through which said
larger BEE transaction will be financed. More particularly, Depfin’s
subscription for preference shares in ICF will enable ICF to discharge
the purchase price for the non-controlling 20% shareholding in Sasol
Mining.
Competition assessment
10]There is no overlap between the activities of the merging parties. As
stated in paragraph above, Nedbank Group Ltd offers a wide range of
wholesale and retail banking services and Depfin, more specifically, is
engaged in providing investment banking services. ICF’s objective is to
invest solely in Sasol Mining and its only activity will be to hold 20% of
Sasol Mining’s share capital. Consequently the transaction will not
substantially prevent or lessen competition in any market.
Public interest
11]The merging parties have confirmed that the proposed deal will have
no negative effect on employment in South Africa since it will not result
in any retrenchments. In addition, the proposed transaction raises no
1 In regard to preference shares see, for example, the interpretation of section 12(2)(a) of the
Competition Act, 1998 in Cape Empowerment Trust Limited and Sanlam Life Insurance Ltd
and Another (Tribunal Case no. 05/X/Jan06).
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other public interest concerns.
CONCLUSION
12]Given that there is no horizontal overlap between the activities of the
merging parties, the proposed transaction does not result in a likely
substantial prevention or lessening of competition in any potential
relevant market. Furthermore, no public interest issues arise from the
proposed deal. We accordingly approve the proposed transaction
unconditionally.
____________________ 15 October 2010
Andreas Wessels DATE
Yasmin Carrim and Norman Manoim concurring
Tribunal Researcher: Thandi Lamprecht
For the merging parties: Webber Wentzel
For the Commission: G Mutizwa
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