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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM168Nov16
In the matter between:
MAIN STREET 1438 (PTY) LTD
and
Primary Acquiring Firm
LITILE GREEN BEVERAGES (PTY) LTD Primary Target Firm
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
: Yasmin Carrim (Presiding Member}
: Norman Manoim (Tribunal Member)
: Andreas Wessels (Tribunal Member)
: 15 December 2016
: 15 December 2016
: 19 January 2017
Reasons for Decision
(1) On 15 December 2016, the Competition Tribunal ("Tribunal") approved the proposed
transaction between Main Street 1438 (Pty) Ltd and Little Green Beverages (Pty)
Limited.
(2) The reasons for approving the proposed transaction follow.
Parties to proposed transaction
Primary acquiring firm
[3] The primary acquiring firm is Main Street 1438 (Pty) Ltd ("Main Street"), a special
purpose vehicle ("SPV") established for the purpose of the proposed transaction.
[4] Main Street is a wholly-owned subsidiary of Main Street 1457 (Pty) Ltd ("New Hold Co"),
which is turn a wholly owned subsidiary of Ethos Private Equity Fund VI
("Ethos Fund VI").
[5] Ethos Fund VI and its subsidiaries will be referred to as the Acquiring Group.
Primary target firm
[6] The primary target firm is Little Green Beverages (Pty) Ltd ("LGB"), a company
incorporated according to the laws of South Africa. LGB is controlled by BOE Private
Equity Investments (Pty) Ltd ("NPE").
[7] NPE is controlled by Nedbank Limited, which is in turn controlled by Old Mutual pie
("Old Mutual").1
[8] Old Mutual and its subsidiaries will be referred to as the LGB Group.
Proposed transaction and rationale
[9] In terms of the proposed transaction the Acquiring Group, acting through Main Street,
will acquire 100% of the issued shares and claims of LGB. Thereafter, the businesses
of LGB will be acquired by a new wholly-owned subsidiary of Main Street, namely Main
Street 1439 (Pty) Ltd ("New Opco") and LGB will be wound up.
(1 O] The Acquiring Group submits that the proposed transaction represents an attractive
private investment opportunity.
(11] LGB Group submits that the proposed transaction represents an opportunity for an
investment in its business to facilitate growth and expansion for the LGB Group.
Impact on competition
(12] The Acquiring Group is a private investment fund that comprises of various local and
foreign investors. In South Africa, Ethos Fund VI has a shareholding in a number of
firms. Of relevance to this transaction is its shareholding in Neopak (Pty) Limited
("Neopak"), which is a manufacturer of corrugated packaging.
1 OLD Mutual is not controlled by any finn.
2
[13] LGB Group and its subsidiaries are involved in the production, packaging and
distribution of branded private label beverage in Southern Africa. 2
[14] The Commission considered the activities of the merging parties and found that there
is a vertical overlap. Neopak, which is a subsidiary of the acquiring firm, produces
corrugated packaging products which is used by LGB Group as layers and trays for its
canned products. However, LGB submits that while it has recently purchased samples
from Neopak for trial purposes, it has no intention to shift its procurement to Neopak
completely and will continue to purchase from existing suppliers provided that they are
able to meet LGB's price and quality requirements. Should LGB procure layer pads
from Neopak in future, this will be on an arm's length basis.
[15] On this basis, the Commission conluded that the merger is unlikely to to result in input
or customer foreclosure.
[16] Furthermore the Commission submits that the proposed transaction will not give rise
to any horizontal overlap as the merging parties do not compete in any relevant market
in South Africa.
[17] Accordingly, the Commission is of the view that the proposed transaction is unlikely to
substantially prevent or lessen competition within the relevant market.
Public interest
[18) The merging parties confirmed that the proposed transaction will have no negative
effect on employment.
(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
2 LGB brands include Refres hhh!, Soda T and Dokta on behalfofMasscash . LGB also produces 19 different
flavours in various pack sizes.
3
Ms. Yasmin Carrim
19 January 2017
DATE
Mr Norman Manoim and Mr Andreas Wessels concurring
Tribunal Researcher:
For the merging parties:
For the Commission:
Busisiwe Masina
Shawn van der Meulen of Webber Wenzel.
Thabelo Masithulela
4