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Trufit (Pty) Ltd and Cobra Group (Pty) Ltd (17/LM/Apr03) [2003] ZACT 35 (12 June 2003)
.RTF of original document
COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 17/LM/Apr03
In the large merger between:
Trufit (Pty) Ltd
and
Cobra Group (Pty) Ltd
Reasons for Decision
________________________________________________________________
Approval
1.
On 4 June 2003 the Competition Tribunal issued a Merger Clearance Certificate approving the merger between Trufit (Pty) Ltd (“Trufit”)
and Cobra Group in terms of section 16(2)(a). The reasons for the approval of the merger appear below.
The Transaction
2.
This transaction entails a sale of the business of the Cobra Group, including the sale of the entire issued share capital of the subsidiaries,
Cobra Brands and Caslead.
3.
It is envisaged that pursuant to the transaction Trufit will amend its name to “Cobra Watertech” and continue the business
of Cobra.
The Parties
4.
The primary acquiring firm is Trufit, a special purpose company. The majority shareholders of Trufit are Ethos Private Equity Fund
IV (“Ethos IV”) and Delta Group Limited, a subsidiary of Delta Plc (“Delta”). The remaining shares are held
by management.
5.
The primary target firm is the Cobra Group (Pty) Ltd, wholly owned by Cobra Investments (Pty) Ltd. Peglers Investments (Pty) Ltd (“Peglers”)
effectively holds 62.4% of Cobra Investments. Peglers is a wholly owned subsidiary of Tomkins International Holdings BV.
Rationale for the Transaction
6.
The parties submit that Tomkins International has identified Cobra as a non-core interest, which it is disposing of. On the other
hand the transaction represents an equity investment for Ethos.
Evaluating the merger
The Relevant Market
7.
Cobra is involved in the manufacture of taps, mixers, valves and related plumbing products generally used for domestic residential
application. It is a supplier of professional plumbing products such as compression fittings, capillary fittings and manufactures
components, which help with efficient water control.
8.
Cobra is active in both the local and export markets. The parties submit that although Cobra has a relatively strong market position
in South Africa, its world market share is negligible.
9.
In the local market Cobra competes with ISCA, Probass, CTM / Italtile and other imported brands.
10.
As a newly formed company Trufit is not active in any market. It controlling shareholders, Ethos IV is an investment company, and
Delta is not active in the market in which Cobra operates. None of Ethos IV’s investment companies operate in this market.
Impact on competition
11.
Since there is neither product overlap nor any vertical relationship between the parties, the Commission concluded that the merger
would not have an effect on the competitive environment. Cobra will not exit the market thus the transaction does not result in a change in the market structure.
Public interest issues
12.
The parties submit that Trufit intends retaining all the current employees. Accordingly, the transaction will not impact negatively
on employment.
Conclusion
13.
We conclude that the merger will not lead to a substantial lessening of competition. There are no employment or other public interest
concerns, which would alter this finding. The merger is therefore unconditionally approved.
_____________
12 June 2003
D. Lewis
Date
Concurring: U.Bhoola, L. Reyburn.
For the merging parties:
Tabacks
For the Commission:
J. Mokwana, K. Ramathula, Competition Commission
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