competitiontribunal
SOUTH AFRICA
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM 1250ct19
In the matter between:
Exxaro Resources Ltd Primary Acquiring Firm
and
Cennergi (Pty) Ltd
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
: Yasmin Carrim (Presiding Member)
: Fiona Tregenna Tribunal Member)
: Thando Vilakazi (Tribunal Member)
: 4 December 2019
: 4 December 2019
: 4 December 2019
Reasons for Decision
Primary Target Firm
[1] On 4 December 2019, the Competition Tribunal ("Tribunal") unconditionally
approved the proposed transaction between Exxaro Resources Ltd and
Cennergi (Pty) Ltd.
[2] The reasons for the unconditional approval follow.
Parties to proposed transaction
Primary acquiring firm
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[3] The primary acquiring firm is Exxaro Resources Ltd ("Exxaro"), a public
company listed on the Johannesburg Stock Exchange.
[4] Exxaro owns and controls various firms in the coal, base metals, titanium
dioxide, ferrous and energy industries. However, of relevance to the proposed
transaction is Exxaro's 50% controlling interest in Cennergi (Pty) Ltd
("Cennergi"), the target firm in the proposed transaction.
Pri,narytargetfinn
[5] The primary target firm is Cennergi, a private company incorporated in
accordance with the laws of South Africa. Cennergi is jointly controlled by
Exxaro and Khopoli Investments Ltd ("Khopoli"), each with a 50%
shareholding.
[6] Khopoli is a wholly owned subsidiary of Tata Power Company Ltd ("Tata
Power"), a public company incorporated in accordance with the laws of India.
[7] Cennergi controls Tsitsikamma Community Wind Farm (RF) (Pty) Ltd, with a
75% shareholding, and Amakhala Emoyeni RE Project 1 (RF) (Pty) Ltd, with
a 95% shareholding.
[8] Cennergi was formed in 2012, as a joint venture between Exxaro and Khopoli
to take hold of the opportunities brought about by the Government of South
Africa's Renewable Energy Independent Power Producer Procurement
Program ("REIPPPP"). Cennergi is responsible for the production of electricity
using wind turbines. The energy produced by Cennergi is supplied to Eskom
in accordance with a 20-year power purchasing agreement ("PPA").
Proposed transaction and rationale
[9] Exxaro will acquire the remaining 50% interest in Cennergi from Khopoli, such
that, post-transaction, Exxaro will wholly own and control Cennergi.
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[11] From the perspective of Khopoli, the decision to monetise this South African
asset is in alignment with Tata Power's strategy to deleverage the Balance
Sheet by divesting sub-optimal sized international assets.
Impact on competition
[12] The Commission considered the activities of the merging parties and found
that there is no horizontal or vertical overlap arising from the proposed
transaction. Furthermore, the Commission found that Exxaro does not have
shares in any company, other than Cennergi, that operates in the renewable
energy sector.
Public interest
[13] The merging parties confirmed that, given that there are no overlaps between
their activities, the proposed transaction is unlikely to result in any
retrenchments. This was confirmed by Takalani Maswime, the employee
representative at Cennergi, who further submitted that the employees at
Cennergi had no concerns regarding the proposed transaction.
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. In
addition, the proposed transaction raises no public interest concerns.
Accordingly, we approved the proposed transaction unconditionally.
Presiding Member: Ms Yasmin Carrim
4 December 2019
DATE
Prof. Fiona Tregenna and Dr Thando Vilakazi concurring
Case Manager:
For the merging parties:
For the Commission:
Helena Graham
Maphanga Maseko of TGR Attorneys
Hlumani Mandia and Mogau Aphane
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