COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 33/LM/Apr11
In the matter between:
Newshelf 1093 (Pty) Ltd
Capital Partners Group Holdings Acquiring Firms
And
Pepkor Holdings Limited Target Firm
Panel : Norman Manoim (Presiding Member)
YasminCarrim (Tribunal Member)
Merle Holden(Tribunal Member)
Heard on : 22/06/2011
Order issued on : 22/06/2011
Reasons issued on : 07/07/2011
Reasons for Decision
Approval
1] On 22 June2011 the Competition Tribunal (“Tribunal”) unconditionally approved
the proposed transaction involving Newshelf 1093 (Pty) Ltd, Capital Partners
Group Holdings and Pepkor Holdings Limited. The reasons for approval of the
proposed transaction follow below.
Parties to transaction
2] The primary acquiring firms are Newshelf 1093 (Pty) Ltd (“SPV”) and Capital
Partners Group Holdings Limited (“CPGHL”). SPV is a private company
incorporated in terms of the laws of the Republic of South Africa. 1The SPV does
not directly or indirectly control any firm. The ordinary shares in the SPV are
issued to and held by SPV Oryx Owner Trust, which is an administrative trust.
1Its principal business address is at 3rd Floor, 200 on Main, corner Main and Bowwood Roads, Claremont, 7708.
1
3] The primary target firm is Pepkor Holdings Limited (“Pepkor”), a public company
in terms of the laws of the Republic of South Africa.2 Pepkor is pre-merger jointly,
controlled by Titan, Brait and OMLACSA.
Proposed transaction and rationale
4] The proposed transaction comprises a number of inter-related steps. Titan will
acquire all the shares held in Pepkor by Brait Entities and Medu Capital Fund I
(“Medu”), which collectively amounts to 24.27%. Titan will then acquire the shares
held in Pepkor by the J &J Pepkor Empowerment Trust (J & J”) and OMLACSA,
which collectively amounts to 24.27%. These are temporary interim steps and Titan
will, for a very limited period and on a temporary basis only, hold 90.33% of the
issued share capital of Pepkor, and will thus, temporarily, have sole control over
Pepkor. Each of the SPV and CPGHL will subscribe for 24.43% of the shares in
Pepkor.3 The parties will amend the shareholders agreement and articles of
association to confer what they term ‘negative control’ on the SPV and CPGHL.
Post-merger, Pepkor will be jointly controlled by SPV, Titan and Brait.
Merging parties’ activities
5] The SPV is a newly incorporated entity and as such, it does not supply any
products and/or services. Oryx SPV Owner Trust, the trust has been established
to hold ordinary shares in the SPV. The trust is a professional management
company. It manages the SPV on behalf of its investors. CPGHL is an
investment holding company and does not engage in any business activities in
South Africa. It provides investment advisory services, outside South Africa, to
Brait SA and other international private equity funds.BraitSA is an international
investment company that manages third party capital committed by a
combination of international and South African investors. Brait SA business
involves the raising and management of investment funds classifies as
alternative assets.
alternative assets.
6] Brait SA’s operations are currently organised into three business units, namely;
private capital (activities in equity and debts markets), public market (includes
activities in public or highly traded securities market), and treasury capital
(includes activities relating to managing Brait’s cash and funding requirements).
Titan group is an investment holding group, which has interests in firms involved
2Pepkor’s principal place of business is at 36 Stellenberg Road, ParrowIndustria, 7490.
3
in food and clothing retail, property investment, hotel management, farming
events, leasing of property, wine making, game farming, mining, air chartering,
and share investments. RMB a division of FirstRand Bank Ltd, is an investment
bank, which inter alia provides advisory services in respect of BEE transactions,
mergers and acquisitions and JSE sponsor services.
7] Pepkor is an investment holding company, which holds interests in various
subsidiaries that operate in the clothing and household retail market.4
Competitive assessment
8] There is no overlap in the products and services of the SPV, Brait and those of
Pepkor. The merging parties have submitted that other than Brait SA’s pre-
existing interest in Pepkor, neither Brait SA nor its investee companies engage in
any business activities which overlap with those of Pepkor. Global Sourcing is a
distributor, but does not operate at the retail level of the market. It does not
compete with Pepkor. Wechsler, Sunpac and GA Agencies operate at a
distribution level and therefore do not compete with Pepkor.
9] The Commission concluded that any horizontal or vertical relationship that might
exist between the parties, have existed prior to this notification
Public interest
10] The parties submitted that the proposed transaction will have no impact on the
public interest. They submitted further that the transaction is merely a
restructuring amongst the shareholders of Pepkor and does not affect Pepkor’s
operations.
Conclusion
11] Based on the above we conclude that the proposed transaction,is merely a
restructuring of shareholder interests and is unlikely to lead to a substantial
prevention or lessening of competition in any relevant market. Furthermore, no
public interest concerns arise from this deal. Accordingly the proposed
transaction is approved unconditionally.
___________________ 07/07/2011
N Manoim Date
transaction is approved unconditionally.
___________________ 07/07/2011
N Manoim Date
4These stores are Pep, Ackermans, Best & Less, Dunns, Pepco Poland, Shoe City, John Craig, Tenacity and
Pepkorfin.
3
Y Carrim and M Holdenconcurring
Tribunal Researcher: ThabaniNgilande
For the merging parties:Cliffe Dekker Hofmeyer
For the Commission: LeratoMonareng