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[2014] ZACT 73
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Nunorex Proprietary Limited v Sunspray Food Ingredients Proprietary Limited and Another (020107) [2014] ZACT 73 (12 December 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 020107
In the matter
between:
NUNOREX
PROPRIETARY
LIMITED
.............................................................
Primary
Acquiring Firm
And
SUNSPRAY FOOD
INGREDIENTS PROPRIETARY LIMITED
DEPCO
PROPRIETARY
LIMITED
........................................................................
Primary
Target Firms
Panel: Andreas
Wessels (Presiding Member)
: Mondo Mazwai
(Tribunal Member)
: Imraan Valodia
(Tribunal Member)
Heard on: 10
December 2014
Order Issued on : 10
December 2014
Reasons Issued on :
12 December 2014
Reasons for
Decision
Approval
[1] On 10 December
2014, the Competition Tribunal (“Tribunal”)
unconditionally approved the merger between Nunorex Proprietary
Limited (“Newco”) and Sunspray Food Ingredients
Proprietary Limited (“Sunspray”) and Depco Proprietary
Limited (“Depco”).
[2] The reasons for
approving the proposed transaction follow.
Primary acquiring
firm
[3] The primary
acquiring firm is Newco, a firm specifically incorporated for the
purpose of the proposed transaction. Newco is
controlled by Arpdeen
Investments Proprietary Limited (“Arpdeen SPV”).
[4] Arpdeen SPV is a
special purpose vehicle incorporated by Shalamuka Capital 2
Proprietary Limited (“Shalamuka”).(45.54%),
Corvest 5
Proprietary Limited (“Corvest 5”) (45.54%) and René
Cross (8.92%). Shalamuka and Corvest 5 are each
ultimately controlled
by FirstRand Limited (“FirstRand”). Newco will therefore
ultimately be controlled by FirstRand.
[5] FirstRand is an
integrated financial services group that provides a range of
services, including retail banking, corporate banking,
private
banking, life insurance, health insurance, asset management, employee
benefit and short-term insurance.
Primary target
firm
[6] The primary
target firms are Sunspray and Depco.
[7] Sunspray is a
food ingredient spray-drying company which manufactures and markets
food ingredients specifically specializing
in:
caramel
powders;
fat
powders including ice cream powder and soft serve powders;
fruit
and vegetable powders;
citrus
oil powders;
cheese
powders;
meat
flavors;
honey
powder;
beetroot
powder;
egg
powders;
liquid
egg products;
liquid
caramels; and
creamers;
milk blends and milk substitutes.
[8] Depco is a
property holding company which is wholly owned by Sunspray.
Proposed
transaction and rationale
[9] The proposed
transaction involves Newco acquiring the business of Sunspray and
Sunspray’s 100% shareholding in Depco.
[10] Shalamuka and
Corvest 5 as investment holding companies whose purpose is to acquire
private equity investments consider the
acquisition of the target
firms as an attractive private equity investment opportunity.
[11] The target
firms submitted that the proposed transaction presents an opportunity
to improve their B-BEE credentials in order
to maintain business
relationships with current corporate customers and potentially build
new business relationships. Additionally,
the proposed transaction
will provide a liquidity event for certain shareholders of Sunspray.
Impact on
competition
[12] According to
the Commission’s findings the proposed transaction would not
result in a horizontal overlap of the merging
parties’
activities. As stated above, Newco is a newly incorporated company
and as such does not provide any products or
services and Newco’s
ultimate controller, FirstRand, is an integrated financial services
group. Furthermore, the merging
parties confirmed that none of the
acquiring groups’ current investments could be considered to be
a competitor of the targets
firms since none of those investments are
in firms that are involved in the manufacture and marketing of food
ingredients. As stated
above, Sunspray is a food ingredient
spray-drying company.
[13] The proposed
transaction raises no vertical competition issues.
[14] We concur with
the Commission’s competition assessment, i.e. that the proposed
transaction is unlikely to substantially
prevent or lessen
competition in any relevant market.
Public interest
[15]
The merging parties confirmed that the proposed transaction wii! not
result in an adverse impact on employment.
1
The proposed transaction further raises no other public interest
concerns.
Conclusion
[16] In light of the
above, we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition
in any relevant market.
In addition, no public interest issues arise from the proposed
transactions. Accordingly we approve the
proposed transaction
unconditionally.
12 December 2014
DATE
Andreas Wessels
Mondo Mazwai and
Imraan Valodia concurring
Tribunal Researcher:
Aneesa Ravat
For the merging
parties: Chris Charter of Cliffe Dekker Hofmeyer
For the Commission:
Nokuphiwa Kunene, Xolela Nokele and Seema Nunkoo
1
Inter
alia
merger
record page 9.