1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:
LM
243Mar17
In the matter between:
SACOIL HOLDINGS LIMITED
Acquiring Firm
And
PHEMBANI OIL (RF) (PTY) LTD
Target Firm
Panel
:
Andiswa Ndoni
(
Presiding
Member)
:
Imraan Valodia
(Tribunal Member)
:
Fiona Tregenna
(Tribunal Member)
Heard on
:
17 May
2017
Order Issued on
:
17 May 2017
Reasons Issued on
:
7
June
2017
REASONS FOR DECISION
APPROVAL
[1]
On
17 May
2017
, the Competition Tribunal
approved the large merger between
SacOil Holdings Limited (“SacOil”) and Phembani Oil (RF) (Pty) Ltd
(“Phembani”)
.
[2]
The reasons for the
approval
follow.
2
PARTIES TO THE TRANSACTION AND THEIR ACTIVITIES
Primary Acquiring Firm
[3]
The primary acquiring firm is
SacOil, a company incorporated in accordance
with the laws of South Africa.
1
SacOil’s largest shareholder is the Government
Employee’s Pension Fund (“GEPF”
) as represented by the Public Investment
C
orporation SOC limited (“PIC
”).
[4]
SacOil has a diverse portfolio of assets on the African continent and
focuses
on investing in the exploration of oil and gas. SacOil is not involved in the
refining of petroleum crude oil and the processing of raw natural gas.
Primary Target Firm
[5]
The t
arget firm is
Phembani
,
a ring fenced special purpose vehicle
controlled
by Gentacure (Pty) Ltd
.
2
The minority shareholder,
Moopong I
n
vestment
Holding
Ltd (“Moopong”)
,
holds the remaining shares
.
Phembani’s only interest
is a 71% equity interest in
Afric Oil (Pty) Ltd (“Afric Oil”).
[6]
Afric Oil is involved in the marketing and distribution of petrol, diesel,
illuminating paraffin, jet fuels and lubricants to a client base that comprises of
local and national governments, parastatals, the mining indus
try, the
construction industry, the transport sector, the manufacturing sector, resellers
and agricultural industries. Afric Oil is only active in the marketing and
distribution of such products, it does not own or operate a refinery
nor does it
own indepe
ndent storage where it holds stock of petroleum products.
1
SacOil
is listed on the Johannesburg
Securities Exchange and on the Alternative I
nvestment Market
on the London Securities Exchange.
2
Gentacure holds a 75% shareholding in Phembani.
3
PROPOSED TRANSACTION AND RATIONALE
[7]
In terms of the proposed transaction,
SacOil intends to acquire 100% of the
issued share capital of Phembani Oil. On completion of the proposed
transaction,
SacOil will control Phembani Oil.
[8]
In terms of the sale of shares agreement, SacOil will purchase 75%
of the
issued share capital in Phembani from G
entacure and thereafter, in terms of a
share subscription and repurchase agreement
entered into between S
ac
Oil and
Moopong, SacOil will subscribe for the remaining 25% shareholding in
Phembani.
[9]
In terms of rationale, the
acquiring firm submits that the acquisition is in line
with its strategy to become a fully
-
integrated
, pan
-
African industry player along
with providing a number of attractive business opportunities.
[10]
The target firm submits that the proposed transaction will assist Afric
Oil to gain
access to working capital through a shareholder who has a large balance sheet
to raise capital for any future projects.
RELEVANT MARKETS AND IMPACT ON COMPETITION
[11]
On the Commission’s an
alysis, the proposed transaction presented no
horizont
al overlaps, with the target firm involved in the exploration of oil and gas
and the primary target firm involved in the wholesale/ distribution of petroleum
products.
3
The Commission submits that neither of the parties are involved in
the refining of petr
oleum crude oil and the processing of raw natural gas.
[12]
In the absence of any horizontal overlap in the merging parties’ activities and
absent any other competition concerns, the Commission concluded that the
proposed merger is unlikely to substantially p
revent or lessen competition in
any market and we find no reason to disagree with this conclusion.
3
Commission Report, page12, para
25.
4
C
ONCLUSION
[13]
The merger
is unlikely to substantially prevent or lessen competition in the
relevant markets in
South Africa
.
[14]
The merger additionally does
not raise any public interest concerns.
[15]
Accordingly we approved the transaction
without conditions.
7
June
2017
Prof F Tregenna
Date
Prof. I Valodia and
Ms. A Ndoni
concurring
Tribunal Researcher
:
Alistair Dey
-
Van Heerden
For the
Commission:
Billy Mabatamela
For the Merging Parties
:
Maphanga
Maseko and Busisiwe Masango of
Tshisevhe Gwina Ratshimbilani Inc
.