competftion lribunal
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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM025Apr17
In the matter between:
NOVUS HOLDINGS LIMITED Primary Acquiring Firm
and
1TB MANUFACTURING (PTY) LTD
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
: AW Wessels (Presiding Member)
: lmraan Valodia (Tribunal Member)
: Mondo Mazwai (Tribunal Member)
: 14 June 2017
: 14 June 2017
: 10 July 2017
Reasons for Decision
Primary Target Firm
[1] On 14 June 2017, the Competition Tribunal ("Tribunal") approved the proposed
transaction involving Novus Holdings Limited ("Novus") and 1TB Manufacturing (Pty)
Ltd ("ITB").
[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 Nevus, a public company duly incorporated in
accordance with the laws of the Republic of South Africa. Nevus is controlled by
Media24 (Pty) Ltd ("Media24"), which is ultimately controlled by Naspers Limited
("Naspers"). Naspers is listed on the Johannesburg Securities Exchange ("JSE") and
the London Stock Exchange ("LSE"). Naspers controls various firms.
[4] Naspers is the holding company for a diversified multinational portfolio of media and
e-commerce platforms. Media24 conducts the print media publication business of the
Naspers group.
[5] Nevus is a commercial printing business comprising of ten specialised printing plants
and one tissue plant within South Africa that provide a range of printing services and
tissue production.
Primary target firm
[6] The primary target firm is 1TB, a private company incorporated in accordance with the
laws of the Republic of South Africa. 1TB is controlled by various trusts ("the Stewart
Family Trusts"). 1TB controls Plaslope (Pty) Ltd ("Plaslope") which is duly
incorporated in accordance with the laws of the Republic of South Africa.
[7] The Stewart Family Trusts control Malakai Investments (Ply) Ltd ("Malakai") and
Monospec (Pty) Ltd ("Monospec), henceforth to be referred to as "sister companies''.
The sister companies are not directly controlled by 1TB, although they are owned by
similar shareholders as 1TB. As part of the proposed transaction, the businesses of
Malakai and Monospec will be transferred to and absorbed by 1TB, and will thus form
part of the 1TB Group being acquired in this transaction.
[8] 1TB and its subsidiary manufacture and supply flexible packaging solutions to
intermediate and end users. The sister companies are also active in plastic
packaging.
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Proposed transaction and rationale
[9] On completion of the proposed transaction, which comprises several steps, 1 Novus
Packaging, a special purpose vehicle wholly-owned by Novus, will hold all of the
issued shares in 1TB (also see paragraph 7 above).
(1 O] Novus submitted that it aims to diversify its revenue stream away from print.
(11) 1TB submitted that the Stewart Family has undertaken to exit the business and is of
the belief that the new owner will be able to grow the target business effectively.
Impact on competition
(12) As stated above, Novus offers printing solutions for newspapers, magazines, retail
inserts, commercial material, labels and books, whereas 1TB supplies flexible
packaging solutions.
[13) The Competition Commission ("Commission") further submitted that ITB's printing
facilities can only print on flexible food packages. Although Nevus owns a single
gravure printing machine that is capable of printing on flexible packaging film, this
machine is not suitable for printing food labels as the underlying layer of the material
used in the label and the ink that is used could migrate into the packaging and impact
the food. Printing on food packaging is the primary business of 1TB.
(14) After considering the activities of the merging parties the Commission ultimately
concluded that there is no horizontal overlap between the activities of the merging
parties since they do not offer products or services that can be considered
interchangeable by customers or consumers in South Africa.
(15] The Commission also found a minor vertical relationship between the merging parties
since Plaslope used to supply plastic bags in which one of the publications printed by
Novus was inserted. As stated, the Commission concluded that this relationship was
a minor one that is unlikely to result in any post-merger foreclosure concerns.
1 See Commission's Report, pages 7 and 8.
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[16] Given the above, the Commission concluded that the proposed transaction is unlikely
to substantially prevent or lessen competition in any market. We concur with the
Commission's conclusion.
Public interest
[17] The merging parties confirmed that the proposed transaction will have no negative
effect on employment in South Africa.2
[18] The proposed transaction furthermore raises no significant other public interest
concerns.3
Conclusion
[19] 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.
MrA~t:
Prof. lmraan Valodia and Ms Mondo Mazwai concurring
Case Manager: Kameel Pancham
For the merging parties: Tamara Dini of Bowman Gilfillan
For the Commission: Rakgole Mokolo
10 July 2017
DATE
2 Merger Record, pages 16 and 70.
3 See Commission's Report, pages 17 and 18. Also see Transcr ipt, pages 7 and 8.
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