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[2018] ZACT 2
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Business Venture Investments No. 2032 v Waco International Holdings (Pty) Ltd (LM252Dec17) [2018] ZACT 2 (26 January 2018)
COMPETITION TRIBUNAL OF SOUTH
AFRICA
Case
No: LM252Dec17
In the matter between:
Business
Venture Investments No. 2032 (Pty)
ltd
Primary
Acquiring Firm
and
Waco
International Holdings (Pty)
Ltd
Primary Target
Firm
Panel
: Norman Manoim (Presiding Member)
:
AW Wessels (Tribunal Member)
: lmraan Valodia (Tribunal Member)
Heard on
: 15 January 2018
Order Issued on
: 15 January 2018
Reasons Issued on
: 26 January 2018
Non-Confidential
Reasons : 13 February 2018
Reasons
for Decision (Non-Confidential)
Approval
[1] On
15 January 2018, the Competition Tribunal ("Tribunal")
approved the proposed
transaction between Business Venture
Investments No. 2032 (Pty) Ltd and Waco International Holdings (Pty)
Ltd.
[2] The
reasons for approving the proposed transaction follow.
Parties to proposed transaction
Primary acquiring firm
[3]
The
primary acquiring firm is Business Venture Investments No. 2032 (Pty)
Ltd ("BidCo"), a special purpose vehicle company
established specifically for the purposes of the proposed
transaction.
[4]
BidCo is ultimately controlled by ABRAAJ
Holdings Limited ( ABRAAJ Holdings"). Mr Arif Masood Naqvi is
the sole controller
of Abraaj Holdings.
[5]
In
South Africa, ABRAAJ Holdings directly and indirectly manages private
equity funds which directly and indirectly control Libstar
Holdings
(Pty) Ltd ("Libstar").
[6]
Libstar
focuses on supplying the food service industry, private label
segments of larger retailers, and on the manufacturing of
products
for brand owners as well as branded products.
Primary
target firm
[7]
The primary target firm is Waco
International Holdings (Pty) Ltd ("Waco"). In South Africa,
Waco, through its subsidiaries,
provides industrial products and
services.
Proposed
transaction and rationale
[8]
In
terms of the Sale Agreement, BidCo will acquire 100% of the issued
shares in Waco. Simultaneously, BEE investors and management
will
subscribe for a minority of 34.6% (BEE investors - [...]and
management- 8.1%) of the ordinary shares in BidCo. Post merger
ABRAAJ will hold 65.3% of the shares in Waco and the rest by BEE
investors and management.
[9]
The Commission noted that it was unaware
of whether the acquisition of[ .. .] of the shares in Waco by the BEE
investors would result
in any change of control. As such the
Commission noted that this transaction was approved providing that
the BEE investors would
not acquire control as a result of this
transaction.
[10]
The merging parties confirmed before us
that the BEE shareholders are likely to be a consortium of various
interested BEE parties,
and that it is therefore unlikely that any
one of those entities would acquire any form of control in Waco. The
merging parties
did acknowledge that if the situation arose whereby
the BEE entity did acquire a form of control through its shareholding
- that
would be notifiable to the competition authorities.
[1]
[11]
ABRAAJ wishes to expand and develop Waco's equipment rental and
industrial service businesses in South
Africa and selected markets
outside of Africa and will acquire control of Waco to achieve this
objective
[12] While
for the shareholders of Waco, the proposed transaction is an
opportunity for the current shareholders
to realize and exit their
investment.
Impact
on competition
[13] The
Commission found that the transaction does not result in a horizontal
overlap as the acquiring group
does not provide industrial products
and services that can be considered substitutable or compete with the
services offered by
Waco.
[14] The
Commission concludes that the proposed transaction is unlikely to
substantially prevent or lessen competition.
[15] We concur
with the Commission that the proposed transaction is unlikely to
substantially prevent or lessen
competition in any relevant market.
Public
interest
[16] The
merging parties confirmed that the proposed transaction will not
result in any negative effect
on employment as no duplication of jobs
shall arise.
[2]
Further, the Commission noted that the proposed transaction does not
result in a horizontal overlap and as such it is unlikely
that there
would be a duplication of roles that lead to job losses.
[17] The
proposed transaction further raises no other public interest
concerns.
Conclusion
[18] ln
light of the above, we conclude that the proposed transaction is
unlikely to substantially prevent
or lessen competition in any
relevant market. In relation to public interest, issues that were
raised, were adequately addressed.
Accordingly, we approve the
proposed transaction without conditions.
Mr
Norman Manoim
Mr
AW Wessels and Prof. lmraan Valodia concurring
13 February 2018
Case
Manager:
Kameel Pancham
For the Merging
Parties:
Natalie
von Ey and Naasha Loopoo of Cliffe
Dekker Hofmeyr on behalf of the Acquiring Firm
Shawn van der Meulen and Werner Rysbergen of
Webber Wentzel on behalf of the Target Firm
For
the Commission:
Nonhlanhla Msiza and Zanele Hadebe
[1]
Transcript page 3, lines 9-18.
[2]
Inter alia
page 10 of the Commission's Recommendation.