COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:67/LM/Aug11
In the matter between:
ETHOS FUND V Acquiring Firm
And
UNIVERSAL INDUSTRIES LTD Target Firm
Panel : Norman Manoim (Presiding Member),
Yasmin Carrim (Tribunal Member)
Andreas Wessels (Tribunal Member)
Heard on : 12 October 2011
Order issued on : 12 October 2011
Reasons issued on : 26 October 2011
Reasons for Decision
Approval
1] On 12 October 2011 the Competition Tribunal (“Tribunal”) approved the large
merger between Ethos Fund V (“Ethos Fund V”) and Universal Industries
Corporation Limited (“Universal Industries”). The reasons for approving the
proposed transaction follow below.
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The Parties to the transaction
2] The primary acquiring firm is Ethos Equity Fund V (“Ethos Fund V”), a private
equity fund incorporated in terms of the laws of the Republic of South Africa.
Ethos Fund V is controlled by the beneficiaries as well as its managers. 1 Ethos
Fund V and its subsidiaries are involved in the supply and distribution of branded
and niche consumer and industrial products, retailing of branded and unbranded
leather goods plumbing material and sanitary ware. Further Ethos Fund V is
involved in the retail and wholesale trading of passenger cars and the aftermarket
for alloy wheels. Lastly, Ethos Fund V is a supplier of lime and industrial minerals.
3] The primary target firm is Universal Industries Corporation Limited (“Universal
Industries”), a firm incorporated in terms of the laws of the Republic of South
Africa. Universal Industries has shareholders holding more than 5% interest
being LNP Trust 19.9%, Wayne Brett Primary Trust 16.9%, Jacob Levy Trust
15.6% and James Martin Family Trust 6.9%. 2 Universal Industries is involved in
the supply of products and services relating to four business areas being, baking
equipment, and system to retail outlets, commercial catering and kitchen
equipment to food services outlet, refrigeration display systems to retail outlet
and glass doors in refrigeration applications.
The Rationale
4] In terms of the Shareholders Agreement, Ethos Fund V and the Management
Consortium of Universal Industries will enter into a scheme of arrangements in
terms of section 114 and section 48 of the Companies Act No.71 of 2008
resulting in Ethos V and the Management Consortium each holding equal shares
(50%) in Universal Industries. Upon completion of the transaction the Ethos Fund
V and the Management Consortium will have joint control over Universal
Industries.
5] Upon completion of the whole process, Ethos Fund V and the Consortium will
Industries.
5] Upon completion of the whole process, Ethos Fund V and the Consortium will
each have an equal shareholding in Universal Industries (Consortium 143 200
1 Ethos Fund V has controlling interests in the following firms: Brandcorp Holdings (Pty) Ltd 59.1%, Busby Investment (Pty)
Ltd 55.3%, Idwala Industries Holdings (Pty) Ltd 27.2%, Plumblink SA (Pty) Ltd 100% and Tiger Automotive Investments (Pty)
Ltd. Ethos Fund I has interests in Juta Holdings (Pty) Ltd (8.5%). Ethos Fund IV has interests in Savcio Holdings (Pty) Ltd.
Ethos Fund Technology has interests in: ATIO Corporation (Pty) Ltd 35.4%, Clickatell (Pty) Ltd 25.1% and CQS Technology
Holdings (Pty) Ltd 35%.
2 Universal Industries control the following firms: BCE Foodservices Equipment (Pty) Ltd (“BCE”); Colcab (Pty) Ltd
(“Colcab”); Insulated Structures (1989) (Pty) Ltd (“Insulated Structures”); Independent Commercial Refrigeration Testing
Laboratory SA (Pty) Ltd (“Test Lab”); Macadams International (Pty) Ltd (“Macadams”) and THH Properties (Pty) Ltd.
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000 “An” ordinary shares + Ethos Fund V 143 200 000 “B” ordinary shares).
6] Post completion of this transaction Ethos Fund V and The Management
Consortium might introduce a black Economic Empowerment (“BEE”) partner,
which when introduced the shareholding in Universal Industries will be
represented as follows: Ethos Fund V 45%, The Management Consortium 45%
and BEE shareholder 10%.
The relevant market and the impact on competition
7] The Commission found that the transaction does not present any overlap due to
the fact that Ethos Fund V is not active in the activities of Universal Industries
being the supply of products and services relating to four business area, being:
Baking equipment and system to retail outlets (i.e supermarkets, convenient
stores), Commercial catering and kitchen equipment to food services outlets,
Refrigeration display system to retail outlet and Glass doors in refrigeration
applications. Accordingly the transaction is unlikely to lead to a substantial
prevention or lessening of competition in any market.
8] Furthermore this transaction raises no public interest concerns and accordingly
the Commission recommends that the transaction be approved without
conditions.
9] We agreed with the Commission’s conclusions and accordingly, the merger was
approved without conditions.
____________________ 26 October 2011
YASMIN CARRIM DATE
N Manoim and A Wessels concurring.
Tribunal Researcher: Thabo Ngilande
For the merging parties: Webber Wentzel
For the Commission: Ms Dineo Mashego
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