COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 016386
In the merger between:
NEWCO (A NEWLY INCORPORATED SPECIAL
PURPOSE VEHICLE) PRIMARY ACQUIRING FIRM
And
REATILE TIMRITE (PTY) LTD PRIMARY TARGET FIRM
Panel : Yasmin Carrim (Presiding Member)
Andiswa Ndoni (Tribunal Member)
Mondo Mazwai (Tribunal Member)
Heard on : 17 April 2013
Order issued on : 17 April 2013
Reasons issued on : 27 May 2013
Decision
Unconditional approval
[1] On 17 April 2013, the Competition Tribunal (“Tr ibunal”) unconditionally
approved the proposed transaction involving Newco ( a newly incorporated
special purpose vehicle) and Reatile Timrite (Pty) Ltd.
[2] The reasons for approving the proposed transaction follow.
Parties to transaction
[3] The primary acquiring firm is Newco, a newly in corporated special purpose
vehicle (“Newco”) with no previous business activit ies. Thebe Mining
Resources (“TMR”) is a mining resources investment enterprise which is part
of the Thebe Group whilst the latter is controlled by the Batho Batho Trust,
Main Street 223 (Pty) Ltd, ABSA Group and Sanlam Group.
[4] The primary target firm is Reatile Timrite (Pty ) Ltd (“Reatile Timrite”) which is
involved in the infrastructure market by providing timber based mining
support, non-timber based mining support and non-mi ning timber based
support to the gold and platinum sectors in South Africa.
[5] The Timrite Group is controlled by Reatile Mining Solutions, Standard Bank
SA, Reindus (Pty) Ltd and three non-controlling man agement member
shareholders, namely Theunis Gerhardus Bester, Mike Botha and Mish
Mogale.
Proposed transaction
[6] The proposed transaction envisages the incorpor ation of Newco. TMR will
hold 70% of the entire issued share capital of Newc o, whilst 3 individuals who
were non-controlling shareholders of Timrite (“Mana gement”) will hold the
remaining 30% thereof.
[7] The actual transaction comprises many steps. Ne wco will acquire sole control
of Reatile Timrite. Thereafter, the business and as sets of Reatile Timrite will
be transferred to a second newly incorporated speci al purpose vehicle (“New
Opco”), which will be the operating entity. Struct urally, Reatile Timrite will not
sit below New Opco, but rather parallel thereto. Ho wever, Reatile Timrite will
remain under the Newco structure as a dormant compa ny with a lease
agreement as its core asset. 1
1 The explanation provided by the merging parties fo r this was that a lease held by Reatile Timrite
over a plantation was the subject of a land claim which had yet to be resolved.
Rationale for the transaction
[8] TMR’s strategy includes investing in diversifyi ng its mining portfolio to
comprise energy and ferrous commodities, precious a nd base metals and
mining services and beneficiation. Therefore, Reati le Timrite’s activities
complement such strategy.
Competition assessment
[9] The acquiring firm does not provide products or services in the timber mining
support, non-timber mining support and non-mining support markets in which
the target firm is active hence no horizontal overlap will arise as a result of this
transaction.
[10] The Commission was concerned about a potential vertical overlap because
the ultimate holding company, namely Thebe Group, i s involved in the mining
industry; however, this involvement is merely as an equity investor and it does
not control the mines it invests in. Furthermore, T MR operates in the coal
mining sector, and not in the platinum and gold min ing sectors to which
Reatile Timrite supplies services. Furthermore, the re are four competitors
competing with Reatile Timrite, namely Bedrock Mini ng Support (Pty) Ltd,
Strocam Mining (Pty) Ltd, NHR Investments and Aveng Manufacturing
Duraset (with an estimated 37%, 10%, 5% and 3% respectively).
[11] Although Reatile Timrite estimated its market share at 45%, there are no
foreclosure concerns given that the Thebe Group doe s not control any gold or
platinum mines in South Africa.
Public interest
[12] The merging parties confirmed that the propose d transaction will not have
any effect on employment. 2
[13] No other public interest issues arise as a result of this transaction.
2 See pages 5 and 60 of the merger record.
CONCLUSION
[14] Having regard to the facts above, we find that the proposed transaction is
unlikely to substantially lessen or prevent competition in any relevant markets.
Accordingly, we approve the proposed merger unconditionally.
______________________ 27 May 2013
YASMIN CARRIM DATE
Andiswa Ndoni and Mondo Mazwai concurring
Tribunal Researcher: Nicola Ilgner
For the Commission: Jatheen Bhima
For the merging parties: Edward Nathan Sonnenbergs Inc.