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[2015] ZACT 12
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DCD SPV v Van De Wetering Industriee (Pty) Limited (020438) [2015] ZACT 12 (18 February 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
020438
In the matter
between:
DCD
SPV
............................................................................................................
Primary
Acquiring Firm
And
VAN
DE WETERING INDUSTRIEE (PTY)
LIMITED
....................................
Primary
Target Firm
Panel: Andreas
Wessels (Presiding Member)
: Anton Roskam
(Tribunal Member)
: Fiona Tregenna
(Tribunal Member)
Heard on: 04
February 2015
Order Issued on : 04
February 2015
Reasons Issued on :
18 February 2015
Reasons for
Decision
Approval
[1] On 04 February
2015, the Competition Tribunal (“Tribunal”)
unconditionally approved the proposed transaction involving
DCD SPV
and Van De Wetering Industriee (Pty) Ltd.
[2] The reasons for
approving the proposed transaction follow.
Parties to
transaction and their activities
Primary acquiring
firm
[3] The primary
acquiring firm is DCD SPV, a newly formed entity specifically
incorporated for the purposes of the proposed transaction.
DCD SPV is
controlled by a consortium of shareholders consisting of Investec
Bank Limited (“Investec”) (41%), Khulasande
Capital
Partnership (“Khulasande”) (41%) and DCD Group (Pty) Ltd
(“DCD”) (18%). DCD SPV does not directly
or indirectly
control any other firm.
[4] In broad terms,
DCD SPV’s shareholders are involved in the following
activities:
Investec
is part of an international specialist banking group that provides a
diverse range of financial products and services.
Khulasande
is a broad-based black owned and controlled private equity and
investment vehicle.
DCD
is a diversified mechanical engineering business that operates
across four primary clusters, i.e. rail, mining and energy,
marine
and defence.
[5]
At the hearing it was brought to the Tribunal’s attention by
the merging parties’ legal counsel that DCD SPV, in
order to
satisfy certain desired BEE requirements, is considering introducing
African Revival Investment Holdings (Pty) Ltd (“ARIH”)
as
a 17% shareholder in DCD SPV.
1
Should ARIH take up the 17% shareholding in DCD SPV, the shareholding
of DCD SPV will be as follows: Investec (33.3%); Khulasande
(33.3%);
DCD (17%); and ARIH (
17
%).
2
[6] ARIH is a black
owned, managed and operated investment company.
Primary target
firm
[7]
The primary target firm is Van De Wetering Industriee (Pty) Ltd
(“VDWI”), a company incorporated in accordance with
the
company laws of the Republic of South Africa. Pre-merger VDWI is 100%
owned by six family trusts.
3
[8] VDWI is an
investment holding company and its main operating company is Afrit
(Pty) Ltd (“Afrit”). Afrit manufactures
and sells a wide
range of standard and bespoke trailers.
[9] VDWI controls a
number of firms. However, only the following firms are relevant to
the proposed transaction:
Afrit;
Afrit
Namibia (Pty) Ltd (“Afrit Namibia”). Afrit Namibia
distributes and sells large truck trailers for the transport
and
logistics industry;
Phuma
Finance (Pty) Ltd (“Phuma Finance”), a short-term
financier for customers purchasing trailers from Afrit;
Phuma
Rentals (Pty) Ltd (“Phuma Rentals”). Phuma Rentals
offers shortterm rentals of trailers and rigs to mostly Afrit
customers awaiting trailer orders;
Atlas
Truck Centre (Pty) Ltd (“Atlas Truck”). Atlas Truck
sells secondhand trailers and is mainly used as the trade-in
arm for
Afrit customers replacing older trailers with new orders;
Atlas
Truck Centre Namibia (Pty) Ltd (“Atlas Truck Namibia”);
and
Phuma
Commercial Cover (Pty) Ltd (“Phuma Commercial”), a new
trading entity within the Afrit group.
4
Proposed
transaction and rationale
[10]
The proposed transaction entails the subscription by DCD SPV of 51%
of the ordinary share capital of VDWI. Upon completion
of the
proposed transaction, the remaining 49% of the share capital of VDWI
will be held by New Holdco, a newly formed company,
on behalf of the
six family trusts. After the proposed transaction VDWI will be
jointly controlled by DCD SPV and New Holdco.
5
[11]
Certain operating properties are included as part of the proposed
transaction. These properties are used for the trailer manufacturing
operations.
6
[12]
The proposed transaction provides an opportunity for the shareholders
of DCD SPV to
inter
alia
invest
in an established manufacturing company with a strong brand.
[13]
The target firm’s rationale is based
inter
alia
on
the fact that VDWI seeks an investor that will provide additional
managerial and operational expertise as well as a suitable
broad-based BEE partner.
Impact on
competition
[14] The Commission
concluded that there is no horizontal overlap between the activities
of the merging parties. As stated above,
the relevant companies that
form part of the Afrit group are involved in the manufacture,
distribution and sale of new trailers,
the sale of second hand trucks
and trailers, the provision of trailer financing, as well as the
rental of trailers. As further
stated above, DCD SPV is a newly
incorporated company that does not carry out any activities. In
addition, the Commission found
that none of its shareholders,
including ARIH, have interests, direct or indirect, in companies
operating in the trailer manufacturing
and related markets.
[15] The Commission
furthermore did not identify any vertical concerns resulting from the
proposed transaction.
[16]
We note that the Commission confirmed, at the hearing, that the
potential introduction of ARIH as a shareholder in DCD SPV
did not
change its conclusion regarding the competitive effects of the
proposed transaction.
7
[17] The Tribunal
concurs 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
[18]
The merging parties confirmed that the proposed transaction will not
result in any negative employment consequences.
8
[19] The proposed
transaction further raises no other public interest concerns.
Conclusion
[20] 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
transaction. Accordingly we approve the
proposed transaction
unconditionally.
18 February 2015
DATE
Andreas Wessels
Anton Roskam and
Fiona Tregenna concurring
Tribunal Researcher:
Ammara Cachalia
For the merging
parties: Ahmore Burger-Smidt of Werksmans
For the Commission:
Relebohile Thabane
1
Transcript,
pages 2 and 3.
2
The
reasons for approving the proposed transaction follow.
3
See
merger record, pages 32 and 71.
4
At
the hearing the merging parties confirmed that Phuma Commercial is an
option for the consortium to acquire as part of the proposed
transaction. Further, that it is a short-term insurance company
specifically for the in-house products produced by the Afrit group
of
companies. See transcript pages 5 and 6.
5
Merger record, pages 49 and 55
6
Merger
record, pages 55 and 56.
7
See
page 3 of the transcript.
8
See
merger record, pages 5 and 81.