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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 81 /LM/Aug12
(015529)
In the matter between:
Micawber 766 (Pty) Ltd
Richtrau No. 94 (Pty) Ltd
Old Mutual Life Assurance Company
(South Africa) Limited Primary Acquiring Firms
And
Pembani Group (Pty) Ltd
Richtrau No. 94 (Pty) Ltd Primary Target Firms
Panel : Andreas Wessels (Presiding Member)
Medi Mokuena (Tribunal Member)
Takalani Madima (Tribunal Member)
Heard on : 10 October 2012
Order issued on : 10 October 2012
Reasons issued on : 29 October 2012
Reasons for Decision
Unconditional approval
[1] On 10 October 2012 the Competition Tribunal (“Tribunal”) approved the
merger between the acquiring firms, Micawber 766 (P ty) Ltd, Richtrau
No. 94 (Pty) Ltd and Old Mutual Life Assurance Comp any (South
Africa) Limited, and the primary target firms, Pemb ani Group (Pty) Ltd
and Richtrau No. 94 (Pty) Ltd.
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[2] The reasons for unconditionally approving the p roposed transaction
follow below.
Parties to transaction
Acquiring firms
[3] The primary acquiring firms are Micawber 766 (P ty) Ltd (“Micawber”),
Richtrau No. 94 (Pty) Ltd (“Richtrau”) and Old Mutu al Life Assurance
Company (South Africa) Limited (“OMLACSA”).
[4] Micawber is a wholly-owned subsidiary of Releas e Investments (Pty)
Ltd (“Release”). Release is a wholly-owned subsidia ry of The Capgro
Family Trust. The Capgro Family Trust is controlled by Mr. Phuthuma
Freedom Nhleko 1 (“Nhleko”). Nhleko has controlling interests in a
number of firms. 2
[5] Micawber is a special purpose vehicle that was established to hold
100% of the total ordinary issued share capital of Micawber 765 (Pty)
Ltd (“Micawber 765”).
[6] Release holds 49.44% of the total ordinary issu ed share capital of
Richtrau and Micawber 765 holds 16.23% of the total ordinary issued
share capital of Richtrau.
[7] Richtrau is an investment holding company with its only investment
being its shareholding interest in Pembani Group (P ty) Ltd (see
paragraph 9 to 12 below).
[8] OMLACSA is a registered financial service provider.
Target firms
[9] The primary target firms are Pembani Group (Pty ) Ltd (“Pembani”) and
Richtrau. Richtrau is controlled by Release and Mic awber (see
paragraphs 5 and 6 above).
1 Current Chairman of Pembani (and former CEO of the MTN Group).
2 See pages 9 and 10 of the merger record.
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[10] The direct shareholders of Pembani include Kha thuma Investments
(Pty) Ltd (“Khathuma 1”) (26.54%), Richtrau (22.38% ), OMLACSA
(20.96%), Khathuma Investments No. 2 (Pty) Ltd (“Kh athuma 2”)
(13.74%), Business Venture Investments No. 1522 (Pt y) Ltd (“BVI”)
(10.08%) and Release (1.4%). BVI, Khathuma 1 and Kh athuma 2 are
investment holding companies and were created speci fically to hold
shares in Pembani. The institutional shareholders t hat own both
ordinary and preference shares in Khathuma 1, Khath uma 2 and
Richtrau are Standard Bank, Liberty Group, OMLACSA and Absa
Capital 3.
[11] The merging parties submitted that Nhleko prem erger ultimately
controls Pembani.
[12] Pembani is an investment holding company which holds, inter alia,
minority empowerment investments in a number of ent ities. Pembani
also holds the majority shareholding in Afric Oil ( Pty) Ltd 4 and Pembani
Coal Carolina (Pty) Ltd 5.
Proposed transaction
[13] The proposed transaction represents an interna l shareholding
restructuring of the shares held in Pembani. In ter ms of this
restructuring certain indirect shareholding in Pemb ani will be converted
to direct shareholding in same.
[14] The merging parties submitted that certain spe cial purpose vehicles
(“SPVs”) through which certain shareholders current ly hold indirect
shares in Pembani will be removed as a result of th e proposed
3 The merging parties submitted that Absa is not participating in the shareholder restructuring
and will not be affected by it.
4 Afric Oil (Pty) Ltd is involved in the marketing of petroleum and lubricant products to
commercial and wholesaler customers.
5 Pembani Coal Carolina (Pty) Ltd is involved in the South African coal mining industry in
Mpumalanga.
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transaction. Such SPVs include Micawber 765, BVI, K hathuma 1 and
Khathuma 2. 6
[15] Furthermore, Standard Bank and Liberty Group w ill no longer hold
indirect shares in Pembani through Khathuma 1, but will post-merger
hold shares directly in Pembani. 7
[16] Pre-transaction, OMLACSA held both indirect sh ares through
Khathuma 2 as well as direct shares in Pembani and post-transaction
OMLACSA will only hold shares directly in Pembani. 8
[17] Nhleko pre-merger held shares indirectly in Pe mbani through
Release, Micawber, Micawber 765, BVI, Richtrau, Kha thuma 1 and
Khathuma 2. As a result of this transaction, Nhleko will own shares in
Pembani by means of a simplified structure through Micawber.
Micawber will also hold shares directly in Richtrau , which in turn holds
shares directly in Pembani. 9
Rationale for the transaction
[18] According to the shareholders of Pembani, the rationale for the
proposed transaction is that the current shareholdi ng structure of
Pembani is not efficiently arranged. From the share holders’
perspective, this transaction will enable Pembani t o enhance its BEE
credentials and create a simplified shareholding structure.
Competition assessment
[19] This transaction is merely an internal shareho lder restructuring and
has no likely negative competition effect in any relevant market.
6 See page 2 of the transcript.
7 See page 2 of the transcript.
8 See page 2 of the transcript.
9 See page 2 of the transcript.
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Public interest
[20] The merging parties confirmed that the propose d transaction will not
have any effect on employment. 10 No other public interest issues arise
as a result of this transaction.
CONCLUSION
[21] Having regard to the facts above, we find that the proposed
transaction is unlikely to substantially prevent or lessen competition in
any relevant market. Furthermore, the proposed tran saction raises no
public interest concerns. Accordingly, we approve t he proposed
transaction unconditionally.
____________________ 29 October 2012
ANDREAS WESSELS DATE
Medi Mokuena and Takalani Madima concurring
Tribunal researcher: Nicola Ilgner
For the merging parties:
Werksmans
For the Commission: Mogau Aphane
10 See pages 21, 31, 96, 193 and 210 of the merger record.