1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:
LM049May18
In the matter between
:
STARFRUIT FINCO B.V
.
Acquiring Firm
And
SPECIALITY CHEMICALS BUSINESS OF AKZO
NOBEL
N.V
.
Target Firm
APPROVAL
[1]
On
4 July 2018,
the Competition Tribunal
(“Tribunal”)
approved the acquisition
by
Starfruit Finco B.V
.
(“Starfruit”) of the Specialty Chemicals Business of Akzo
Nobel N.V
.
(“Akzo Nobel SC”)
.
[2]
The reasons for
approv
ing the proposed transaction
follow
.
Panel
:
A
W Wessels
(Presiding Member)
:
E Daniels
(Tribunal Member)
:
Prof
F Tregenna
(Tribunal Member)
Heard on
:
4 July 2018
Order Issued on
:
4 July 2018
Reasons Issued on
:
7 August
201
8
NON
-
CONFIDENTIAL
REASONS FOR DECISION
2
PARTIES TO THE
PROPOSED
TRANSACTION AND THEIR ACTIVITIES
Primary Acquiring Firm
[3]
The
primary acquiring firm is
Starfruit, a
company incorporated in accordance
with the laws of the
Netherlands. Starfruit is a special acquisition vehicle
controlled by Carlyle Partners VII Cayman Holdings L.P
.
,
a fund managed by
affiliates of The Carlyle Group
(“Carlyle”).
[4]
Carlyle
is a global alternative asset manager, which manages funds that invest
globally.
Primary Target Firm
[5]
The
primary target
firm
is
Akzo Nobel SC
. Akzo Nobel SC is
controlled by Akzo
Nobel N.V
.
(“Akzo Nobel”)
,
a public company incorporated in terms of the laws
of the Netherlands. Akzo Nobel is not controlled by any
single
firm
or individual
.
[6]
Akzo Nobel SC
produces and supplies a wide range of
specialty
chemicals.
It
operates
through five busine
ss units: industrial chemicals
;
s
urface chemistry
;
pulp and performance chemicals
;
polymer chemistry
;
and
ethylene and sulfur
derivatives.
[7]
We note that
Akzo Nobel
SC has no manufacturing facilities in South Africa.
It
has appointed various third party distributors to transport and sell
its
products
in South Africa.
PROPOSED TRANSACTION AND RATIONALE
[8]
In terms of the
Share Purchase Agreement
, Starfruit
intends to
acquire s
ole
control
of
Akzo Nobel SC. Upon implementation of the proposed transaction,
Starfruit
will
solely control Akzo Nobel SC.
[9]
In term of rationale, Carlyle submitted that it intends to support the growth an
d
development of Akzo Nobel SC.
3
[10]
Akzo No
bel SC submitted that Carlyle’s global presence and financial capacity
would enable it to
achieve
its full potential.
IMPACT ON COMPETITION
[11]
The
Competition
Commission
(“Commission”)
found no horizontal overlap
in
South Africa
between the activities of the
acquiring group and the target firm
.
[12]
However, since Akzo Nobel SC makes use of a number of third party
distributors in South Africa, t
he Commission
investigated whether the
merged
entity would have the ability and incentive to foreclose the supply of Akzo Nobel
SC’s
specialty
chemicals to
these
third part
y
distributors.
The distributors
contacted by the Commission confirmed that they were not dependent on Akzo
Nobel for the supply o
f specialty chemicals in South Africa.
Furthermore,
Carlyle confirmed that it
[
…
]
1
of the relevant specialty chemicals
in South Africa.
[13]
Given the above, t
he Commission
concluded that
the proposed transaction
is
unlikely to substantially prevent or lessen competition in any
relevant
market in
S
outh Africa
.
We see no reason to disagree
with this conclusion
.
PUBLIC INTEREST
[14]
The
m
e
rging parties confirmed that the proposed
transaction
will have no
negative effects on employment
in South Africa
.
2
[15]
No other public interest concerns arise from the proposed transaction.
CONCLUSION
[16]
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,
1
Certain information has been claimed as confidential by the merging parties and excluded from th
e
public version of the reasons.
2
Merger Record
pages 18 and
235
.
4
no public interest issues arise from the proposed transaction. Accordingly, we
approve the prop
osed transaction unconditionally.
7 August
201
8
M
r AW Wessels
Date
Mr Enver Daniels
and
Prof
Fiona Tregenna
concurring
Tribunal
Case Manager
:
Alistair Dey
-
v
an Heerden
For the
merging parties
:
Rick van
Rensburg
and Kirsty Van Den Bergh
of
E
NSa
frica
For the Commission
:
Innocent Mhlongo and Amanda Mfuphi