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[2018] ZACT 21
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Main Street 1518 (Pty) Ltd v Phembani Group (Pty) Ltd (LM272Jan18) [2018] ZACT 21 (28 March 2018)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM272Jan18
In
the matter between:
Main
Street 1518 (Pty)
Ltd
Primary Acquiring Firm
And
Phembani
Group (Pty)
Ltd
Primary Target Firm
Panel
: Andreas Wessels (Presiding Member)
: Medi
Mokuena (Tribunal Member)
: Andiswa
Ndoni (Tribunal Member)
Heard
on
: 1 March 2018
Order
Issued on
: 1 March 2018
Reasons
Issued on
: 28 March 2018
REASONS
FOR DECISION
Approval
[1]
On
1 March 2018, the Competition Tribunal ("Tribunal")
unconditionally approved the proposed transaction involving Main
Street 1518 (Pty) Ltd ("BFM") and Phembani Group (Pty) Ltd
("Phembani").
[2]
The
reasons for the approval of the proposed transaction follow.
Parties
to the proposed transaction
Primary
Acquiring Firm
[3]
The
primary acquiring firm is BFM, a newly incorporated fund management
company established purely for the purposes of the proposed
transaction.
[4]
BFM's
shareholders will comprise the management of Phembani and Mr Phuthuma
Nhleko ("Mr Nhleko"). Mr Nhleko will hold
51% of BFM's
shares directly or through entities controlled by him. Mr. Nhleko
controls firms which are involved in the energy,
resources and
infrastructure related sectors.
Primary
Target Firm
[5]
The
primary target firm is Phembani. Phembani is ultimately controlled by
Mr Nhleko through shareholding held through a number of
firms
controlled by him.
[6]
Phembani
is a South African based industrial holding company with a focus on
the making of investments in, and the operating of
businesses and
interests which fall within the oil, gas, minerals, mineral resources
(diamonds, platinum and coal), metals and
infrastructure related
sectors in Africa.
Proposed
transaction
[7]
The
proposed transaction entails the restructuring of Phembani for the
purposes of facilitating a listing of Phembani on the JSE
through
Main Street 1378 (Pty) Ltd ("ListCo"). The restructuring
will occur prior to the listing and will result in the
establishment
of a private equity fund (Phembani Fund Partnership which will
hereinafter be referred to as the "Fund")
which will own
all of the shares of Phembani and which will be managed by BFM.
[8]
Post-merger
BFM will control the assets of the Fund, including Phembani and its
subsidiaries.
[1]
Impact
on competition
[9]
The
Competition Commission ("Commission'') found that the proposed
transaction does not result in a horizontal overlap between
the
activities of the merging parties.
[2]
[10] The
Commission noted that through the proposed transaction, Phembani
intends to facilitate
a listing on the JSE through ListCo.
Furthermore, Mr. Nhleko will remain the ultimate controlling
shareholder in BFM and as a result
the proposed transaction is
unlikely to change the structure of any market.
[11]
In
view of the above, the Commission concluded that the proposed
transaction is unlikely to lead to a substantial prevention or
lessening of competition in any relevant market. We have no reason to
disagree with the Commission's conclusion.
Public
interest
[12]
The merging parties confirmed that the
proposed transaction will not have any adverse effect on
employment.
[3]
[13]
The proposed transaction raises no other
public interest concerns.
Conclusion
[14]
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.
Mr
Andreas Wessels
Ms
Andiswa Ndoni and Mrs Medi Mokuena concurring
28
March 2018 Date
Tribunal
Case Manager
: Kgothatso
Kgobe
For
the Merging Parties
: M Moloi
of Webber Wentzel
For
the Commission
: N Msiza and A Mfuphi
[1]
The Commission and merging parties indicated that the transaction
was notified in terms of the section 12(2)(g) of the Competition
Act. Also see page 2 of the Transcript.
[2]
Also see Transcript, pages 3 and 4.
[3]
Merger Record , pages 10 and 44.