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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM109Sep16
In the matter between:
ABERCOM PROPRIETARY LIMITED Primary Acqui ring Firm
and
BRANCH ENGINEERING PROPRIETARY LIMITED Primary Target Firms
ERF 616 SELBY PROPRIETARY LIMITED
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
: AW Wessels (Presiding Member)
: Mondo Mazwai (Tribunal Member)
: Andiswa Ndoni (Tribunal Member)
: 09 November 2016
: 09 November 2016
: 05 December 2016
Reasons for Decision
(1] On 09 November 2016, the Competition Tribunal rTribunal ") approved the proposed
transaction involving Abercom Proprietary Limited and Branch Engineering
Proprietary Limited and Erf 616 Selby Proprietary Limited.
[2] The reasons for approving the proposed transaction follow.
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Parties to proposed transaction
Primary acquiring firm
[3] The primary acquiring firm is Abercom Proprietary Limited ("Abercom"), a company
incorporated in accordance with the laws of the Republic of South Africa. Abercom is
a newly incorporated entity which has been formed for the purpose of the present
transaction and does not currently provide any products or services. Abercom does
not control any firm.
[4] Abercom is jointly controlled by Ramsons Trust ("Ramsons Trust"), Global Capital
Empowerment Investments Proprietary Limited ("Global Capital") and Investec Bank
Limited. Global Capital is jointly controlled by Global Capital individuals, Bluesky
Investment Proprietary Limited and Investec Limited ("Investec").
[5] Ramsons Trust is a family trust of the founders of the primary target firms in the
instant transaction. Ramsons Trust does not engage in any activities other than those
undertaken by the target firms. Global Capital is a private equity investment business.
Investec conducts business as a bank and financial institution.
Primary target firms
[6] The primary target firms are (i) Branch Engineering Proprietary Limited ("Branch
Engineering"); and (ii) Erf 616 Selby Proprietary Limited ("Erf 616"). The target firms
are currently jointly controlled by Larry Cohen, Safika Industrial Proprietary Limited
and Ramsons Trust.
[7] Branch Engineering has two operational subsidiaries: (i) View Tanks Proprietary
Limited; and (ii) ABECO Proprietary Limited. Branch Engineering, through its
subsidiaries, operates in the broader liquid storage sector, specifically the
manufacturing and supply of pressed metal tanks for storage.
(8) Erf 616 is a company holding properties from which Branch Engineering operates. It
owns two adjacent properties in Selby, Johannesburg and one in Bedfordview. The
Bedfordvlew property consists of A-grade office property occupied by the target firms
and a third part tenant.
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Proposed transaction
[9} In terms of the proposed transaction, Abercom will acquire all the ordinary shares in
a newly formed company Amanzi Storage Solutions (Pty) Ltd ("Amanzi"). Abercom
will then acquire all the issued shares in Branch Engineering and Erf 616 from the
current shareholders. Post-merger, Abercom will control Amanzi, Branch Engineering
and Erf 616. As a final step of the transaction, Branch Engineering will be wound up
and Amanzi will hold the business and assets of Branch Engineering and its
subsidiaries.
Impact on competition
[1 OJ The Competition Commission ("Commission") found that the proposed transaction is
unlikely to change the structure of any market since the acquiring group, other than
Ramsons Trust, does not have any interests in firms that provide storage in form of
modular, pressed galvanized steel tanks in competition with the primary target firms.
[11] The Commission also considered the effect of the proposed transaction on the third
party tenant of the Bedfordview property of Erf 616 and found likely adverse
competition effects unlikely given inter a/ia the remaining duration of an existing lease
agreement. Furthermore, the tenant in question did not raise any concerns.
[12] Therefore, the Commission concluded that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market in South Africa. We
concur with the Commission's conclusion.
Public interest
[13} The merging parties confirmed that the proposed transaction will not have an adverse
effect on employment in South Africa.1
[14] Furthermore, the proposed transaction does not raise any other public interest
concerns.
Conclusion
[15] 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
1 Merger Record inter alia pages 7 and 58.
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public interest issues arise from the proposed transaction. Accordingly, we approve
the proposed transaction unconditionally.
Mr AW Wessels
05 December 2016
DATE
Ms Mondo Mazwai and Ms Andiswa Ndoni concurring
Tribunal Case Manager.
For the merging parties:
For the Commission:
Busisiwe Masina
Albert Aukema of Cliffe Dekker Hofmeyr Inc
Xolela Nokele
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