COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 69/LM/Jun12
015313
In the matter between:
Sanlam Private Equity, a division of Acquiring firm
Sanlam Life Insurance Limited
And
Weldamax (Pty) Ltd Target firm
Panel : Yasmin Carrim (Presiding Member)
Andreas Wessels (Tribunal Member)
Andiswa Ndoni (Tribunal Member)
Heard on : 25 July 2012
Order issued on : 25 July 2012
Reasons issued on : 08 August 2012
Reasons for Decision
Approval
1] On 25 July 2012 the Competition Tribunal (“Tribunal”) approved the
merger between Sanlam Private Equity (a division of Sanlam Life
Insurance Limited) and Weldamax (Pty) Ltd. The reasons for approving
the proposed transaction follow below.
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Parties to the transaction
2] The primary acquiring firm is Sanlam Private Equity (“Sanlam
Equity”), a private equity fund which is a division of Sanlam Life
Insurance Limited (“Sanlam Life”). Sanlam Life is controlled by
Sanlam Limited, a JSE-listed financial services provider. Sanlam Life
currently holds a [25% - 30%] interest in Weldamax.
3] The primary target firm is Weldamax (Pty) Ltd (“Weldamax”), a
private company involved in the provision of welding products such as
welding equipment, welding consumables and welding glass.
Weldamax is currently controlled by African Infrastructure and Energy
(“AIE”), which in turn is controlled by Destiny Corporation Holdings
(“Destiny”). Weldamax controls two companies, namely Zenrust (Pty)
Ltd and Maxweld and Brazen (Pty) Ltd.
Proposed transaction
4] In terms of the proposed transaction, Sanlam Equity will acquire a
[50.01% - 55%] interest of the issued ordinary shares in Weldamax
from AIE.
5] Upon implementation of the transaction, Weldamax will be directly
controlled by Sanlam Life as the latter will ultimately hold [80% - 85%]
of the share capital of Weldamax.
Rationale for the transaction
6] Sanlam Life already holds an interest in both Destiny and Weldamax
and as such it sees the transaction as a way to manage and mitigate
its risk by buying the shares itself as opposed to a new third party.
The merging parties submitted that this transaction presents an
opportunity for the Sanlam Life to align their risk exposure with the
potential return possibilities, as an acquisition of a bigger equity stake
will result in the capital exposure matching return potentials.1
7] AIE would like to sell its shares in Weldamax in order to repay a
loan advanced from its own holding company Destiny.
1 See page 4 of the transcript.
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Relevant markets and impact on competition
8] There is no overlap present between the activities of the merging
parties at all as they are involved in two very different markets.
9] The transaction represents a change in control and as such there
will not be an accretion in the market. As such, the estimated market
shares will remain relatively low.
Public interest
10] The merging parties confirmed that there will be no adverse effect on
employment as a result of the proposed transaction 2. No other public
interest issues arise as a result of this transaction.
CONCLUSION
11]Having regard to the facts above, we find that the proposed merger is
unlikely to substantially lessen or prevent competition in any relevant
markets, due to the various competitors and relatively low market
shares. Furthermore, the proposed transaction raises no adverse
public interest concerns. Accordingly, we approve the proposed
merger unconditionally.
____________________ 08 August 2012
YASMIN CARRIM DATE
Andreas Wessels and Andiswa Ndoni concurring.
Tribunal Researcher: Nicola Ilgner
For the merging parties: Edward Nathan Sonnenbergs Inc.
For the Commission: Takalani Ramavhoya
2 See page 47 of the record.
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