REASONS FOR DECISION
THE PARTIES
[1]
The primary acquiring firm is Calshelf Investments 152 (Proprietary) Limited (“Calshelf 152”)
a new shelf company which is a subsidiary of Liberty Star Consumer Holdings (Pty) Limited (“Libstar”). Libstar controls various firms namely: Chet Chemical Products (Pty) Limited; Dickon Hall Foods (Pty) Limited; Liberty Star Food Solutions
(Pty) Limited; Gourmet Consumer Holdings (Pty) Limited, which controls Rialto Foods (Pty) Limited; and Retailer Brands (Pty) Limited.
[2]
The acquiring firms have interests mainly in the foods sector. Dickon Hall manufactures, packages and
distributes “dry” and “wet” food products; Gourmet Consumer Holdings imports specialty French, Italian and
Spanish foodstuffs; Retailer Brands distributes jelly, spices, instant soup, spicy sauces and corn flour. The acquiring firms supply
their products throughout South Africa, but primarily provide their services to members of their group, and not to third parties.
[3]
The primary target firm is Orley Foods (Pty) Ltd (“Orley Foods”) which is controlled
by Orley Holdings (Pty) Ltd (“Orley Holdings”). Orley Holdings is jointly controlled by two Trusts: the Grandi Trust
(“Grandi”) and the SMA Trust (“SMA”).
[4]
Orley Foods manufactures a wide range of ingredients for the retail, wholesale, food service and
manufacturing sectors of the economy which includes chocolate products, syrups and sugar based products, non-dairy whips, toppings
and panned and coated products. These products are distributed throughout South Africa.
THE TRANSACTION
[5]
This proposed transaction is pursuant to a sale of business agreement entered into by the merging
parties on 24 July 2007, in which Calshelf 152 through Libstar, will purchase Orley Foods’ entire business as a going concern.
Simultaneously Calshelf 152, Grandi, SMA and the two managing directors of Orley Foods, namely; Abrahams and Janik, entered into
a shareholders agreement, in which joint control of the Calshelf 152 was conferred on Libstar, Grandi and SMA, and in which during
1 January 2009 and 2010, Libstar has a call option entitling it to acquire the interests of Grandi and SMA in Calshelf 152. During
the same period, Grandi and SMA have put an option against Libstar which entitles them to dispose of their interests in Calshelf
152 to Libstar.
[6]
The merging parties submitted that the purpose of these shareholder arrangements is to enable the
business of Orley Foods to be continued by Calshelf 152 under the management of Abrahams and Janik, through Grandi and SMA.
[7]
As a result of the implementation of the proposed transaction, Calshelf 152 will remain the subsidiary
of Libstar which will hold 70% of the equity in Orley Foods, and Calshelf 152 will be jointly controlled by Libstar, Grandi and SMA,
where Grandi and SMA will together hold 30% of the equity in Calshelf 152.
RATIONALE FOR THE TRANSACTION
[8]
According to the merging parties, this transaction is a complementary fit which will allow Orley
Foods to broaden its market range by participating in the acquiring firms’ food solutions/out-of home platform, and further
enable it to achieve a favourable BEE status. For the acquiring firms, this transaction provides an opportunity to increase their
scale, as well as improve the quality of earnings and asset base.
COMPETITION EVALUATION
[9]
The products manufactured by the acquiring firms do not in any way overlap or compete with any of
the products manufactured by Orley Foods. Furthermore Orley Foods does not supply any products to any of the acquiring firms nor
do any of the acquiring firms supply any products to Orley Foods. Consequently this merger does not raise any horizontal or vertical
concerns.
CONCLUSION
[10]
We find that this proposed merger is unlikely to substantially prevent or lessen competition in any market.
Furthermore, no negative effects on employment will result, and no significant public interest concerns are raised. Accordingly the
proposed transaction is unconditionally approved.
_______________
12 December 2007
D Lewis
Date
Tribunal Member
Y Carrim and M Mokuena concur in the judgment of D Lewis
Tribunal Researcher: L Xaba
For the merging parties
:
Metier, and Libstar
For the Commission
:
I Mohlala, and L Khumalo
(Mergers and Acquisitions)
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