COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:58/LM/Jul11
In the matter between:
Senwesbel Limited Acquiring Firm
And
Senwes Limited Target Firm
Panel : Norman Manoim (Presiding Member),
Yasmin Carrim (Tribunal Member)
Andreas Wessels (Tribunal Member)
Heard on : 07 September 2011
Order issued on : 07 September 2011
Reasons issued on : 03 October 2011
Reasons for Decision
Approval
1] On 07 September 2011 the Competition Tribunal (“Tribunal”) approved the
large merger between Senwesbel Limited (“acquiring firm”) and Senwes
Limited (“target firm”). The Tribunal’s reasons for approving the transaction
are set out below.
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The Parties to the transaction
2] The acquiring firm is Sewesbel Limited (“Senwesbel”), a firm incorporated
under the laws of the Republic of South Africa. Senwesbel is not controlled
by a single entity and its shares are held by various individual farmers.
Senwesbel was established in 1996 with the sole purpose of holding
shares in Senwes Limited.
3] The target firm is Senwes Limited (“Senwes”), 1 a company incorporated
under the laws of the Republic of South Africa. The current shareholders in
Senwes include Senwesbel, Producer Shareholders, Royal Bafokeng
Consortium (the “RBC”) (34.7%)2 and public shareholders.
Description and rationale for the transaction
4] The proposed transaction is a large merger in terms of which Senwesbel is
increasing its shareholding in Senwes from the present 41% to 58% by
acquiring 17% of the RBC shares from Royal Bafokeng Agri Investments
(Pty) Ltd.3
5] When the shares were acquired by RBC in 2006 as part of a Black
Economic Empowerment deal, the Sale of Share Agreement included a
pre-emptive right in favour of Senwesbel and the proposed transaction is a
result of Senwesbel exercising such right.
6] Senwesbel sees this transaction as means of maintaining its majority
shareholding in Senwes while Royal Bafokeng finds it limiting that they
cannot increase their shareholding in Senwes and thereby increase their
influence and have hence opted for realising their return on investment
through the above divestiture.
The activities of the parties
1 http://www.senwes.co.za/Korporatief/Default.aspx?sflang=en-ZA
2 This Consortium consists of three separate entities collectively owning a total shareholding
of 34.7% in Senwes.
3 This is a wholly owned subsidiary of Royal Bafokeng Holding (Pty) Ltd.
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7] Senwesbel was established with the sole purpose of holding shares in
Senwes and conducts no other business other than holding such shares.
8] Founded over 100 years ago, Senwes is a diversified agricultural business
supplying production inputs; market access and value added services to
its customers in the agricultural sector through retail stores, grain and
oilseed silo operations. Senwes also supplies credit to farmers for input
financing and long- to medium-term financing through its divisions Senwes
Grainlink, Senwes Village, Senwes Credit and Senwes Agricultural
Services.
9] The Commission finds that the proposed transaction is unlikely to
substantially prevent or lessen competition due to there being no overlap
in any of the activities of the activities of the parties.
10]Treacle Fund II Trust (“Treacle”), a shareholder and a RBC member
entity, raised concerns relating to the cross directorship between
Senwesbel and Senwes and stated that the majority of board members
being farm producers, could, through their control over Senwesbel, change
incentives in the operations of Senwes favouring their own interests. The
Commission concluded that this concern was not merger specific and pre-
existed the proposed transaction.
11]Treacle further stated that the time limit within which Senwesbel could
exercise the pre-emptive right was not adhered to by the merging parties.
The Commission’s response to this averment was that it did not have
jurisdiction over contractual conditions between parties
12]The merging parties submitted that the proposed transaction does not
raise any significant public interest concerns and has no adverse effect on
employment.
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Conclusion
13]In light of the above factors and the Commission’s analysis, the Tribunal
concludes that the proposed transaction is unlikely to substantially prevent
or lessen competition.
14]Accordingly, the above merger is approved without conditions.
____________________ 03 October 2011
N Manoim Date
Y Carrim and A Wessels concurring.
Tribunal Researcher: Songezo Ralarala
For the merging parties: Advocate Greta Engelbrecht instructed by Andries
Le Grange of Cliffe Dekker Hofmeyr
For the Commission: Dineo Mashego and Lindiwe Khumalo
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