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[2014] ZACT 87
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Sibanye Gold Limited v Newshelf 1114 (Proprietary) Limited (017855) [2014] ZACT 87 (3 March 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: 017855
In
the matter between:
SIBANYE
GOLD
LIMITED
......................................................................
Primary
Acquiring Firm
And
NEWSHELF
1114 (PROPRIETARY)
LIMITED
.........................................
Primary
Target Firm
Panel:
Norman Manoim (Presiding Member)
:
Dr Takalani Madima (Tribunal Member)
:
Prof imraan Valodia (Tribunal Member)
Heard
on: 5 February 2014
Order
Issued on: 5 February 2014
Reasons
Issued on : 3 March 2014
Reasons
for Decision
Approval
[1]
On 5 February 2014, the Competition Tribunal (“Tribunal”)
conditionally approved the acquisition by Sibanye Gold
Limited of 76%
of the shares held in Newshelf 1114 (Pty) Ltd from Gold One
international Limited.
[2]
The reasons for conditionally approving the proposed transaction
follow.
Parties
to transaction
Acquiring
firm
[3]
The primary acquiring firm is Sibanye Gold Limited
(“Sibanye”).
Sibanye
is a public company listed on the JSE with
a
secondary
listing of its American Depositary Receipts on the New York Stock
Exchange. Sibanye controls a number of firms
inter
alia
Living
Gold (Pty) Ltd, Sibanye Gold Nursing College (Pty) Ltd, Sibanye Gold
Shared Service (Pty) Ltd, St Helena Hospital (Pty) Ltd
and Sibanye
Gold Protection Services Ltd.
Target
firm
[4]
The primary target firm is Newshejf 1114 (Pty) Ltd
(“Newshelf”).
Newshelf
is solely controlled by Gold One International Ltd
(Gold
One”)
which
holds 76% of its shares with the remaining 24% being held by Rand
Uranium Empowerment Partnership
(“RU
Partnerships”).
Newshelf
wholly controls Rand Uranium (Pty) Ltd
(“Rand
Uranium”)
which
in turn wholly controls the Cooke Rehabilitation Trust. Gold One is a
public company listed on the ASX Limited in Australia
with a
secondary dual listing on the JSE that is controlled by a consortium
of investors from the People's Republic of China through
BCX Gold
Investment Holdings Ltd (BVI) (“BCX”).
[5]
BCX is controlled by;
The
Baiyin Group;
The
Chinese African Development Bank; and
The
Changxin Element Group.
Gold
One controls:
Gold
One Europe Ltd;
Gold
One Africa Ltd;
Twin
Hills Operations (Pty) Ltd;
Australian
Silicon Operations (Pty) Ltd;
Gold
One Asia Ltd (BVI).
Gold
One Europe in turn controls:
Ezulwini
Mining Company (Pty) Ltd;
Gold
One Africa in turn controls:
Etendeka
Prospecting and Mining Company (Pty) Ltd;
Gold
One Mozambique Limitada;
New
Kleinfontein Mining Company Ltd;
Goliath
Gold Mining Ltd.
[6]
It must be noted that in order to undertake the proposed transaction,
a restructuring and consolidation of the Cooke Mining
Operations
currently housed within Rand Uranium
("Cooke
Shafts 1 through 3”)
and
Ezuiwini
(“Cooke
Shaft 4”)
will
take place. Post the aforementioned restructuring and consolidation,
Ezuiwini will be controlled by Newshelf 1114. As such,
Newshelf 1114
comprises of the Cooke shafts 1 through 4 underground operations and
the Randfontein Surface Operations in the Western
Witwatersrand Basin
region, collectively referred to as (the
“
Cooke
Mining Operations”).
Proposed
Transaction
[7]
Slbanye Gold intends to acquire control over Gold One’s Cooke
Mining Operations
i.e.
the underground operations of Gold One’s Cooke Shafts 1 through
4 and the Randfontein Surface Operations, by acquiring
76% of the
shares in Newshelf 1114. Upon implementation Sibanye Gold will
acquire sole control over the business of Newshelf 1114
and the RU
Partnership will retain its 24% non-controlling interest in Newshelf
1114.
1
Rationale
Acquiring
firm
[8]
This transaction presents Sibanye with an opportunity to consolidate
the West Rand and West Witwatersrand surface gold production
opportunities in a joint venture with Gold one and will allow Sibanye
exclusively to develop and exploit the potential of the West
Rand and
Western Witwatersrand Basin Region, resulting in material
infrastructure and operational synergies. The transaction also
allows
for the introduction of an anchor Sibanye Gold Shareholder with long
term investment potential. The Cooke operation will
serve to support
Sibanye Gold's organic growth profile.
Target
firm
[9]
Gold one submits that it will acquire a healthy dividend stream by
obtaining a stake in the equity of Sibanye Gold through a
relative
valuation merger of the Rand Uranium and Ezulwini.
Relevant
Market and Impact on Competition
[10]
The relevant market is the market for the international production
and supply of gold and silver. The merging parties’
activities
overlap in the international markets for the production and supply
gold and silver.
[11]
In the international market for the production of gold the merged
entity will have a market share of approximately 1.41% with
a market
share accretion of 0.08%. The market for the supply of gold is highly
fragmented with the likelihood of significant competition
being faced
by the merging party from other players.
2
[12]
In the international market for the production of silver Sibanye
Gold’s production of silver is so negligible that reliable
data
cannot be found to determine its market share. The merged entity
would continue to face significant competition from other
viable
competitors.
3
[13]
The Commission found that the proposed transaction is unlikely to
substantially prevent or lesson competition given the merged
entities
minimal market share of less than 2% in respect of gold and 1% in
respect of silver.
Public
Interest Analysis
[14]
The merging parties submitted that no retrenchments were envisaged as
a result of the proposed transaction. The Commission’s
investigation however revealed that all the relevant unions were
given notice prior to the merger filing of possible retrenchments
within all divisions of Sibanye Gold, The merging parties stated that
this retrenchment process was not merger specific and was
based
solely on their operational requirements,
[15]
The Commission conducted an extensive investigation to assess the
possible link between the retrenchments and the proposed
transaction.
During this investigation Gold One issued a Section 189 Notice in
respective of a possible retrenchment of 82 employees
from the Cooke
Mining Operations. This process was subsequently withdrawn as there
was a concern from Gold One that the retrenchment
exercise impact on
the proposed transaction.
4
This raised concerns that Gold One would embark on a retrenchment
process post-merger.
[16]
The Commission, after reviewing all the information submitted, found
that it was not able conclusively to determine whether
the
retrenchments were merger specific or not. However, taking into
account all the information they had gathered, including the
withdrawn retrenchments by Gold One, the Commission recommended that
the transaction be approved subject to the condition which
would
prevent the merged entity from retrenching any employee(s) as a
result of the mergerfor a period of two years following the
merger
implementation date.
5
The merging parties chose not to contest this condition. We agree
with this condition as set out in Annexure A to these, reasons.
Conclusion
[17]
In Sight of the above we agree with the Commission's conclusion that
the proposed transactions are unlikely to substantially
prevent or
lessen competition in the market for the international production and
supply of gold and silver. In addition, no public
interest issues
arise if the condition proposed is imposed to prevent the
retrenchment of employees of the merged entity as a result
of the
merger. Accordingly we approve the proposed transaction subject to
the condition contained in Annexure A.
03
March 2014
DATE
Imraan
Valodia
Norman
Manoim and Takalani Madima concurring
Tribunal
Researcher: Derrick Bowles
For
the merging parties: ENS Africa (on behalf of the acquiring and
target firms)
For
the Commission: Portia Bele assisted by Themba Mahlanga and Jatheen
Bhima
COMPETITION TRIBUNAL OF
SOUTH AFRICA
Case
No.: 017855
In
the matter between:
SIBANYE
GOLD
LIMITED
......................................................
PRIMARY
ACQUIRING FIRM
and
NEWSHELF
1114 (PTY)
LTD
...........................................................
PRIMARY
TARGET FIRM
Panel:
N Manoim (Presiding Member), T Madima (Tribunal Member) and I Valodia
(Tribunal Member)
Heard
on : 5 February 2014
Decided
on : 5 February 2014
ORDER
Further
to the recommendation of the Competition Commission in terms of
section 14A(1)(b), the Competition Act, 1998 (“the
Act”)
the Competition Tribunal orders that-
1.
the merger between Sibanye Gold Limited and Newshelf 1114 Proprietary
Limited be approved in terms of section 16(2)(b) of the
Act subject
to the conditions in Annexure A; and
2.
a Merger Clearance Certificate be issued in terms of Competition
Tribunal rule 35(5)(a).
5
February 2014
Date
Presiding
Member
N
Manoim
Concurring:
T Madima and I Valodia
1
It
must be noted that the Commission also considered the effects of a
related transaction on the proposed transaction. In terms
of this
related transaction the RU Partnership which currently holds a 24%
non-controliing interest in Newshelf 1114, intends to
acquire
negative control over Newshelf 1114 in terms of section 12{2){g) of
the Act. Upon implementation of the proposed related
transaction,
Newshelf 1114 will be jointly controlled by Gold One (76%) and the RU
Partnership (23.4%). The RU Partners hip/Newshelf
1114 transaction
contemplates the RU Partnership’s acquisition of joint control
over Newshelf 1114, while the proposed transaction
contemplates
Sibanye Gold’s parallel acquisition of Gold One’s 76%
shareholding in Newshelf 1114 (i.e. sole control
over same) such that
Sibanye Gold essentially ‘steps into the shoes’ of Gold
One as Newshelf 1114’s majority
shareholder. Upon the
successful implementation of both transactions, the cumulative effect
of the proposed transaction and the
RU Partnership/Newshelf 1114
transaction which currently run parallel with one another is such
that Newsheif 1114 will be jointly
controlled by Sibanye Gold (76%)
and by the RU Partnership (24%). The cumulative effect of both these
transactions constitutes
a move from sole control by Gold One to
joint control by Sibanye Gold and the RU Partnership of Newshelf
1114. This transaction
is hereinafter referred to as the
“
RU
Partnership/Newshelf 1114 Transaction”.
2
See
Table 2 on page 30 of the Commission’s Report.
3
See
Table 3 on page 31-32 of the Commission's Report
4
See
page 37 of the Commission's Report
5
This
sentiment was echoed by the representatives from the USASA and
Solidarity trade unions.