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[2016] ZACT 12
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Stellar Capital Partners Ltd v Friedshelf 1678 (Pty) Ltd (LM208Jan16) [2016] ZACT 12 (25 February 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM208Jan16
In
the matter between:
STELLAR
CAPITAL
PARTNERS
LTD
Primary Acquiring Firm
and
FRIEDSHELF
1678
(PTY)
LTD
Primary Target Firm
Panel
: Yasmin Carrim (Presiding Member)
: Medi Mokuena (Tribunal
Member)
: Andiswa Ndoni (Tribunal
Member)
Heard
on
: 27 January 2016
Order
Issued on
: 27 January 2016
Reasons
Issued on
: 25 February 2016
Reasons
for Decision
Approval
[1]
On 27 January 2016, the Competition Tribunal ("Tribunal")
approved the proposed transaction between Stellar Capital
Partners
Ltd and Friedshelf 1678 Proprietary Ltd.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring firm
[3]
The primary acquiring firm is Stellar Capital Partners Ltd
("Stellar
Capital'),
a company duly
incorporated in accordance with the company laws of the Republic of
South Africa. It is an investment holding company
providing financial
services and strategic direction to its investee companies. Stellar
Capital already holds 45.99% of the issued
share capital of the
target firm, Cadiz Bidco.
[4]
Stellar Capital also holds strategic non-controlling interests in
firms involved in the sale of industrial equipment, mining
rehabilitation services, the information and Communication Technology
("ICT") equipment and solutions sector and asset
management
services.
Primary
target firm
[5]
The primary target firm is Friedshelf 1678 (Ply) Ltd also referred to
as Cadiz Bidco, a firm duly incorporated in accordance
with the
company laws of the Republic of South Africa.
[6]
The firm is not controlled by any single entity as its shareholding
is dispersed. For the sake of completeness the following
shareholders
hold more than 5% of the issued shares in Cadiz Bidco:
1.
Stellar Capital
(the acquiring firm)
45.99%
2.
Friedshelf 1638
(Ply) Ltd
24.31%
3.
Makana Financial
Services (Ply) Ltd
14.72%
4.
Groombridge
Nominees (Ply) Ltd
12.18%
[7]
Cadiz Bidco specializes in providing asset management services to
institutional investors and big net worth individuals and
to a lesser
extent corporate advisory services such as merger and acquisition
clients. Cadiz Bidco controls a few other companies
which together
are referred to as Cadiz Bidco.
Proposed
transaction and rationale
[8]
Stellar Capital intends to acquire a further 39.03% of the issued
share capital of Cadiz Bidco. Stellar Capital will achieve
this
by acquiring 24.31% of the shares held by Friedshelf 1638 (Ply) Ltd
and 14.72% of shares held by Makana Financial Services
(Ply) Ltd.
Following which Stellar Capital will hold 85.02% of the issued share
capital of Cadiz Bidco, which will confer it, control
of Cadiz Bidco.
[9]
Stellar Capital Partners Ltd submits that the proposed transaction
will provide it with an opportunity to increase the
firm's
exposure to an upside in a successful turnaround of Cadiz Group,
while simultaneously affording the opportunity to dispose
of various
non-core assets of [the] Cadiz Group at attractive.
[10]
Cadiz Group submits that the proposed transaction will provide it
with a single controlling shareholder which will assist its
management to realize growth opportunities and achieve turnaround.
Impact
on competition
[11]
The Competition Commission ("Commission") found that there
is no overlap between the activities of the merging parties.
The
Acquiring Group is an investment holding company providing financial
services and strategic direction to its investee companies.
The
Acquiring Group holds non-controlling interest in firms involved in
industrial equipment, mining rehabilitation services, the
ICT
equipment, solution sector and asset management services. The
Acquiring Group also provides working capital to automotive repair
firms and finances firms looking to acquire critical ICT
infrastructure.
[12]
The Target Group ("Cadiz Group") specializes in asset
management services to institutional investors and high net
worth
individuals and, to a lesser extent, corporate advisory services, for
example to a merger and acquisition clients.
[13]
The Commission therefore concluded that the proposed transaction is
unlikely to substantially prevent or lessen competition
in any
relevant market.
[14]
We concurred with the Commission's conclusion that the proposed
transaction is unlikely to substantially prevent or lessen
competition in any relevant market.
Public
interest
[15]
The
m
erging
parties. confirmed
that the
proposed
transaction will not result in any adverse
i
mpact
on employment
[1]
[16]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[17]
In light of the above, we concluded 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 approved the
proposed
transaction unconditionally.
25
February
2016
DATE
_________________________
Ms
Yasmin Carrim
Mrs
Medi Mokuena and Ms Andiswa Ndoni concurring
Tribunal
Researcher:
Busisiwe Masina
For
the merging parties:
Cliffe Dekker
Hofrneyr Inc
For
the Commission:
Rakgole Mokole
[1]
Inter
alia
merger
record
page
3.