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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM079Jun17
In the large merger between:
..
Brookfield Asset Management Inc. Primary Acquiring Firm
and
TerraForm Global Inc.
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
Primary Target Firm
: Yasmin Carrim (Presiding Member)
: Anton Roskam (Tribunal Member)
: Enver Daniels (Tribunal Member
: 26 July 2017
: 26 July 2017
: 18 August 2017
Reasons for Decision
[1] On 26 July 2017, the Competition Tribunal ("Tribunal") unconditionally approved
the proposed transaction between Brookfield Asset Management Inc
("Brookfield") and TerraForm Global Inc. ("TerraForm").
[2] The reasons for approving the proposed transaction follow.
Parties to the Proposed Transaction
Primary Acquiring Firm
[3] The primary acquiring firm is Brookfield, a firm incorporated in accordance with
the laws of Canada and is not controlled by any firm. Brookfield controls a
number of firms including GrafTech International Holdings Inc ("GrafTech").
Brookfield is active in South Africa through its control of GrafTech, which controls
GrafTech South Africa (Pty) Ltd ("GrafTech SA"), a South African entity.
[4] Brookfield is a global asset management company which owns and operates
assets on behalf of shareholders and clients with a focus on property, renewable
energy, infrastructure and private equity. GrafTech SA is mainly active in the
manufacture and supply of graphite electrodes and refractories, which are sold
to construction companies and to operations in the high temperature
environment. GrafTech produces silicon and moulds which have applications in
solar and wind energy generation. Neither of these products are produced in
South Africa.
Primary Target Firm
[5] The primary target firm is TerraForm, a public company incorporated in
accordance with the laws of the United States and is controlled by SunEdison
Holdings Corporation ("SunEdison"). TerraForm indirectly holds shares in about
12 South African companies.
[6] TerraForm has interests in firms that own and operate solar and wind power
plants located in a number of countries, including South Africa. In South Africa,
TerraForm has interests in five solar plants and one wind power plant.
Proposed Transaction and Rationale
[7] Brookfield intends to acquire the entire issued share capital of TerraForm. Post
transaction, Brookfield will exercise sole control over Terraform.
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[8] According to the merging parties, the proposed transaction will, inter a/ia, allow
Brookfield to invest in the South African renewable energy market and will allow
TerraForm to continue its business operations in South Africa.
Relevant Market and Impact on Competition
[9] The Commission found a horizontal overlap in the global market for the
provision of renewable energy. However, it found that Brookfield does not have
an interest in any firm that owns and operates solar and wind power plants in
South Africa. The proposed transaction will be Brookfield's first investment in
the South African renewable energy market. Therefore, the Commission found
that there is no geographic overlap between the business activities of Brookfield
and TerraForm.
[1 OJ The Commission was therefore of the view that the proposed transaction is
unlikely to substantially prevent or lessen competition in the relevant market.
[11] Based on the above, we concurred with the Commission's finding that the
proposed transaction is unlikely to substantially prevent or lessen competition in
any of the relevant markets.
Public Interest
[12] The merging parties submit that proposed transaction will have no negative effect
on employment as no retrenchments are envisaged as a direct result of the
proposed transaction.1 The Commission found that no job losses, retrenchments
or redundancies would arise as a result of the transaction as there will be no
integration of the businesses of the merging parties post-merger.2
[13] The Commission was of the view that the proposed transaction is unlikely to raise
concerns on any other public interest grounds.
1 Merger Record page 955.
2 Transcript 26 July 2017 at page 3.
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Conclusion
[14] In light of the above, we concluded that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market or raise any
adverse public interest issues. Accordingly, we approved the proposed
transaction unconditionally.
Mr Enver Daniels
18 August 2017
DATE
Ms Yasmin Carrim and Mr Anton Roskam concurring
Tribunal Researcher:
For the merging parties:
For the Commission:
Hayley Lyle
Sivuyise Lutshiti and Tamara Dini of Bowman Gilfillan
for the acquiring firm. Candice Upfold and Marianne
Wagener of Norton Rose Fulbright on behalf of the
target firm.
Rethabile Ncheche
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