On 22 March 2006 the Competition Tribunal issued a merger clearance certificate approving the merger between Friedshelf 649 (Pty)
Ltd and Ellerine Bros (Pty) Ltd and Wireless Business Solutions Holdings (Pty) Ltd. The reasons appear below.
The Parties
2.
The acquiring firms are Friedshelf 649 (Pty) Ltd (“Friedshelf”) and Ellerine Bros (Pty) Ltd (“Ellerine”). Friedshelf is a special purpose vehicle formed for the purposes of effecting this transaction. Friedshelf is directly controlled
by Blue Label Investments (Pty) Ltd (“Blue Label”). Ellerine is subject to the direct joint control of the Eric Ellerine
Trust and the Sidney Ellerine Trust (collectively the “Ellerine Trusts”).
3.
The primary target firm is Wireless Business Solution Holdings (Pty) Ltd (“Wireless Holdings”). The operations of Wireless
Holdings are directly controlled by Richtrau No. 10 (Pty) Ltd (“Richtrau”). Wireless Holdings controls Wireless Business
Solutions Service Provider Company (Pty) Ltd (“Wireless SP) and Wireless Business Solutions (Pty) Ltd.
The Merger Transaction
4.
The shareholding of and in Wireless Holdings pre and post merger is as follows:
Prior to the current transaction, Friedshelf and Ellerine entered into an agreement to purchase 40% of the entire issued share capital
of Wireless SP (in a ratio of 30:70).
6.
As an indivisible part of the transaction, the acquiring firms are also entitled to purchase, in the aggregate, 40% of the entire
issued share capital of Wireless Holdings (with Friedshelf acquiring 28% and Ellerine acquiring 12%), together with 40% of a loan
account held by Richtrau against Wireless Business Solutions (Pty) Ltd. It is the acquisition of this 40% shareholding and claims
against Wireless Holdings that comprises the current transaction. The remaining 60% of Wireless Holdings will continue to be held
by Richtrau.
7.
According to the parties, Friedshelf and Ellerine will exercise joint control over Wireless Holdings.
Rationale for the Transaction
8.
The proposed transaction is viewed by the acquiring firms as facilitating their entry into a market, which they perceive as providing
a realistic opportunity for growth. For the target firm the merger will provide it access to significant additional resources which
will allow it to capitalise the business and facilitate its growth.
The relevant product markets
9.
The parties operate in different product markets and their activities do not overlap. On the one hand, Friedshelf has never traded
before and has no business activities. Blue Label, which effectively controls Friedshelf, is an investment-holding entity, involved
in a number of different enterprises including telecommunications, information technology, venture capital and property. Ellerine
is a family-controlled property-owning and investment company.
10.
Wireless Holdings, on the other hand, offers products and services in the broad-band access and associated data services market. It also provides the infrastructure for the transmission of data to wholesale and retail
customers.
Public Interest
11.
There are no public interest issues that may raise serious competition concerns.
Conclusion
12.
We conclude that the merger will not lead to a substantial lessening or prevention of competition.
07 April 2006
Y. CarrimDate
Concurring: M Moerane and L Reyburn
For the merging parties:
Nathalia Lopez and Lee Mendelsohn, Edward Nathan Corporate Law
Advisors
For the Commission:
Thami Kekana
SAFLII:
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