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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: LM001Apr24
In the large merger between:
The Batho Batho Trust Primary Acquiring Firm
And
Thebe Investment Corporation Proprietary
Limited
Primary Target Firm
Panel: L Mncube (Presiding Member)
A Kessery (Tribunal Member)
A Ndoni (Tribunal Member)
Heard on: 02 May 2024
Order issued on: 02 May 2024
Reasons Issued on: 13 May 2024
REASONS FOR DECISION
Approval
[1] On 02 May 2024, the Competition Tribunal (“the Tribunal”) unconditionally
approved the large merger which involves the repurchasing of shares in a series
of indivisible transactions by Thebe Investment Corporation Proprietary Limited
(“TIC”) from the Batho Batho Trust (“BBT”), as well as various employee
shareholding schemes. As a result of the share buy-back, BBT will then acquire
an additional of the ordinary shares in TIC to increase its total shareholding
to
Parties to the transaction and their activities
Primary acquiring firm
[2] The primary acquiring firm is BBT, a trust established in accordance with the
laws of South Africa. BBT is not controlled by any firm. Instead, BBT is duly
It
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SOUTH AFRICA
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represented by its trustees, namely
trustees of BBT do not control any firm/s. BBT only holds a - shareholding in
TIC and does not have shareholding in any other firm.
[3] BBT is a community-based trust engaged in asset holding for the benefit of
community-based beneficiaries, education and charitable objectives, any other
body, company, trust or organisation that operates principally in South Africa.
BBT does not conduct any business activities of its own in South Africa or
elsewhere and presently has a single investment, being its shareholding in the
target firm, TIC.
Primary target firm
[4] The primary target firm is TIC which is directly held- by BBT, - by
Main Street 1485 (RF) (Pty) Ltd ("MS1485"), - by Main Street 1547 (RF)
(Pty) Ltd ("MS 154 7") and - by Umhlomulo Equity Participation (Pty) Ltd
("UEP").
[5] MS1485 is wholly owned by Main Street 223 (RF) (Pty) Ltd ("MS223"). MS223
is, in turn, wholly owned by UEP, which is wholly owned by employees . On the
other hand, MS1547 is wholly owned by Main Street 1532 (RF) (Pty) Ltd
("MS1532"). MS1532 is, in turn, held by management employees of TIC.
[6] MS1485, MS223 and UEP (collectively "Mancos 1") are employee investment
special purpose vehicles. Together, Mancos 1 holds an aggregate shareholding
of approximately - in TIC. MS1547 and MS1532 (collectively "Mancos 2")
are management investment special purpose vehicles. Together, Mancos 2
holds an aggregate shareholding of approximately- in TIC.
[7] TIC controls numerous firms in South Africa, including Thebe Renewable Energy
Holdings (Pty) Ltd, Thebe Petroleum Investments (Pty) Ltd, Thebe SPV 022
(Pty) Ltd and Thebe SPV 025 (RF) (Pty) Ltd, amongst others (collectively, the
"TIC Group").
[8] TIC is an investment holding and management company. The TIC Group's
interests, which are primarily South African based, consist of mainly investments
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in the energy and resources division (comprising of power and water, oil and
gas, mining, chemicals business units) and services division (comprising of
investments in property and financial services, food and logistics services, and
media as well as telecommunication business units).
Proposed transaction
Transaction
[9] The proposed transaction involves the repurchasing of shares in a series of
indivisible transactions by TIC from the employee shareholding schemes (i.e.,
ManCos1 and ManCos2), as well as BBT. Following the completion and the
implementation of the repurchase, the shareholding of TIC will be as follows:
9.1 BBT’s shareholding in TIC will increase from of the issued ordinary
shares to of the issued ordinary shares;
9.2 ManCos 1’s shareholding in TIC will decrease from to of the
issued ordinary shares; and
9.3 ManCos 2’s shareholding in TIC will decrease from of the issued
ordinary shares of TIC to of the issued ordinary shares.
[10] Importantly, it is noted that the existing employee ownership schemes (ManCos
1 and ManCos 2) will continue to have shareholdings in TIC, however, the share
buy-back will result in a decrease of the schemes’ respective shareholding in
TIC.
Competition assessment
[11] The Competition Commission (“Commission”) considered the activities of the
merging parties and found that the proposed transaction does not result in a
horizontal overlap as BBT does not conduct any activities in competition with
TIC (including the TIC Group). In addition, the proposed transaction does not
result in a vertical overlap. We agree that there are no horizontal or vertical
overlaps in the activities of the merging parties.
Conclusion on the competition assessment
ManCos 2’s shareholding in TIC will decrease from of the issued
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[12] Having considered the above, we are of the view that the proposed transaction
is unlikely to result in a substantial prevention or lessening of competition in any
relevant market.
Public interest assessment
Employment
[13] The merging parties submitted that there will be no retrenchments or job losses
as a result of the proposed transaction.
[14] BBT only has one employee who is responsible for the day-to-day administration
of the trust, and she reports to the managing trustee. The employees of TIC are
represented by an employee representative. The BBT employee and the TIC
employee representative did not raise employment concerns as a result of the
proposed transaction.
[15] Given the above, we are of the view that the proposed transaction is unlikely to
raise any employment concerns post-merger.
Spread of ownership
[16] All of the trustees of BBT are historically advantaged persons (“HDPs”). TIC has
86.75% shareholding held by HDPs, the bulk of this HDPs shareholding is
accounted for BBT with its 50% shareholding in TIC. In addition, TIC is held
19.5% by management employees who are largely HDPs. Post-merger, HDPs
will continue to have representation in TIC, through BBT’s increased
shareholding of 70% and management employees’ shareholding of 13%.
[17] The Commission noted that as a result of the share buy back in this merger, the
existing employee ownership schemes’ (ManCos 1 and ManCos 2)
shareholdings in TIC will decrease. Nevertheless, the increase in HDP
ownership outweighs this decrease in employee ownership. In particular, the
decrease in employee ownership is due to these relevant employee ownership
schemes needing to repay loans taken to acquire their shareholding in the target
firm. In any event, it bears mention that these employee ownership schemes
benefit management employees of the target firms, and not necessarily a broad
base of workers. In light of this, the Commission is of the view that the proposed
transaction promotes a greater spread of ownership.
Other public interest factors
[18] We are not aware of any other public interest concerns arising in this case.
Conclusion on public interest
[19] In light of the above, we do not believe that the proposed transaction raises
public interest concerns.
Third party views
[20] No third parties, whether customers or competitors, expressed concerns about
the proposed merger to the Tribunal.
Conclusion
[21] For the reasons set out above, we conclude that the proposed transaction is
unlikely to substantially prevent or lessen competition in any relevant market and
does not raise any significant public interest concerns.
[22] In the circumstances, the Tribunal unconditionally approves the proposed
transaction.
Signed by:Libcrty Mncubc
Signed at:2024-05-13 19:44:08 +02:00
Rcason:Witnessing Liberty Mocl.be
Prof. Liberty Mncube
13 May 2024
Date
Adv. Anisa Kessery and Ms. Andiswa Ndoni concurring.
Tribunal Case Manager:
For the Merging Parties:
For the Commission:
Theodora Michaletos
Nkonzo Hlatshwayo and Phuti Mashalane of
Werksmans
Wiri Gumbie, Grashum Mutizwa and Reabetswe
Molotsi
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