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[2015] ZACT 9
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Rockwood Private Equity Fund I v Bravo Group (Pty) Ltd (019760) [2015] ZACT 9 (23 January 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 019760
In the matter
between:
Rockwood
Private Equity Fund I
….................................................................................
Acquiring
Firm
and
Bravo
Group (Pty)
Ltd
..............................................................................................................
Target
Firm
Panel: Norman Manoim
(Presiding Member)
Yasmin Carrim
(Tribunal Member)
Mondo Mazwai
(Tribunal Member)
Heard on: 27
November 2014
Order issued on : 27
November 2014
Reasons issued on :
23 January 2015
Reasons for
Decision
Approval
1. On 27 November
2014 the Competition Tribunal (the “Tribunal”)
unconditionally approved an acquisition by Rockwood
Private Equity
Fund I (“Rockwood”) of Bravo Group (Pty) Ltd (“Bravo”).
2. The reasons for
the approval of the proposed transaction follow.
3.
The primary acquiring firm is Rockwood, a South African
en
commandite
partnership
comprised of investors in the form of limited partners and a general
partner.
1
Rockwood controls the following firms: Safripol Holdings (Pty) Ltd,
Tsebo Holdings (Pty) Ltd, Enviroserv Holdings (Pty) Ltd and
Kwikspace
Modular Buildings Holdings (Pty) Ltd.
4. These firms are
inter alia involved in the manufacturing of plastics, facilities and
infrastructure, catering, cleaning and hygiene
services, third party
procurement and energy management. None of these firms operate in
markets that are relevant to the present
transaction.
5. The primary
target firm is Bravo, a firm incorporated in terms of the laws of the
Republic of South Africa. Bravo is jointly
controlled by Rockwood
-49% shareholding and Bravo Manco (Pty) Ltd (“Bravo Manco”)
- 30% shareholding. The remaining
shares are held by New Gx
Investments (Pty) Ltd. Bravo controls these firms in South Africa:
Bravo Group Manufacturing (Pty) Ltd
and Bravo Group Properties.
6.
Bravo manufactures, imports and sells a wide range of household
furniture products in South Africa. It conducts its business
through
these three main divisions: (i) Sleep products Division - this
division manufactures a wide range of bedding products including
inner-spring mattresses and timber-based sets under brand names
Sealy, Edblo, Siumberland and King Koil, (ii) Foil Case Goods
Division - this division produces a range of foiled particle board
case goods comprising of
inter
alia
wardrobe,
kitchen and wall units under the brand names High Point, Pat Cornick,
Valenti and Victoria Lewis and (iii) Lounge Furniture
Division - this
division produces a range of fabric and leather lounge furniture
under the brand names Alpine Lounge, Grafton Everest,
GoimmaGomma and
Milano Décor.
Proposed
transaction and rationale
7. In terms of the
proposed transaction Rockwood intends to increase its shareholding in
Bravo from 49% to 100%. Post-merger, Rockwood
will have sole control
over Bravo.
8. From Rockwood’s
perspective the proposed transaction is intended to align the
interests of Bravo with that of its own as
a private equity investor.
9. Bravo’s
sellers submitted that Bravo needs additional funding and support and
as they are not able to provide this funding,
they have decided to
sell their interest in Bravo in order to make way for a more
financially suitable shareholder who is capable
of providing the
required funding.
Competition
Analysis
10. In this
transaction Rockwood is increasing its stake from one of joint
control to sole control. As Rockwood holds no other interests
in
firms in the market that Bravo operates in, the merger does not bring
about any increase in concentration, only an increment
in its ability
to control the target firm. This in itself does not raise any
competition concerns.
Public interest
11.
The merging parties confirmed that the proposed transaction will have
no adverse effect on employment and will not result in
any
retrenchments in South Africa.
2
The proposed transaction raises no other public interest concerns.
Conclusion
12. For the reasons
mentioned above, we approve the proposed transaction unconditionally.
23 January 2015
Date
Mr. Norman Manoim
Ms. Yasmin Carrim
and Ms. Mondo Mazwái concurring
Tribunal Researcher:
Ipeleng Selaiedi
For the merging
parties: Graeme Wickins of Werksmans
For the Commission :
Zanele Hadebe
1
Rockwood
is controlled by its general named the General Partnership (“GP
Partner”), a South African
en
commandite
partnership.
The GP Partner is in turn controlled by a trust named the Equity
investment Trust (“El Trust”) and Main
Street 1267 (Pty)
Ltd (“Main Street”). The E! Trust is not controlled by
any firm. Main Street is a wholly-owned subsidiary
of Rockwood
Private Equity (Pty) Ltd (“Rockwood PE”). Rockwood PE is
not controlled by any firm.
2
See
merger record, pages 9. Also see paragraph 7.1 of the Commission’s
merger report.