The primary acquiring firm is Imperial Holdings Limited (‘Imperial’), a public company duly registered on the JSE Securities
Exchange. Imperial is not controlled by any single firm but has the following as its main shareholders holding the indicated percentages:
[2.1]
Public Investment Corporation
18.21%;
[2.2]
Old Mutual Group
11.23%;
[2.3]
Ukhamba
10.1%;
[2.4]
Sanlam
8.4% and
[2.4]
Lereko Mobility
7.25%.
[3]
Imperial controls in excess of 25 firms. Refer to Annexure ‘B’ to the CC 4 filed by Imperial. The firm relevant in this transaction is Tourism Holdings Rental SA (Pty) Ltd trading as Maui and Britz (‘Maui and Britz’).
[4]
The primary target firm is Jurgens CI 225 (Pty) Ltd (‘Jurgens’), a company duly incorporated in terms of the Laws of
the Republic South Africa. Jurgens is controlled by the Michael Delport Trust (62.44%) and Whole Life Investments (37.556%). Jurgens
controls Jurgens Steelworx (Pty) Ltd, a dormant company.
The transaction
[5]
This transaction involves the acquisition by Imperial of 80% of the entire issued share capital of Jurgens.
Imperial will acquire the 80% issued shares in Jurgens by means of the acquisition of 48.749% of the entire issued share capital from
current shareholders of Jurgens and the subscription for 31.215% of the total entire issued share capital of the company.
In addition Imperial has a call option and the shareholders of Jurgens have a put option in their respective companies in terms of
which Imperial will directly acquire the remaining 20% of the entire issued share capital of Jurgens. Record pp435-438.
Rationale for the transaction
[6]
Imperial perceives the transaction as enabling it to expand its business into other areas.
[7]
Mr. Delport who rebuilt the Jurgens business since he acquired it in 1989, now wishes to realise his investment.
The parties’ activities
Primary acquiring firm
[8]
Imperial is a holding company which owns subsidiaries active in the transportation and logistics business. It owns a wide range of
businesses that operate in these industries but the only one that concerns us in this merger is Maui and Britz, a rental company
that rents motorhomes, 4x4 vehicles and motorbikes mainly to international tourists or international travel agents for their South
African travel packages. Refer to pp84-87 of the record for details on all of Imperial’s activities.
Primary target firm
Jurgens
[9]
Jurgens is a manufacturer of caravans and motorhomes, and various related accessories. For the purposes of this merger the area of interest is its manufacture of motorhomes and caravans.
[10]
Jurgens owns a division which manufactures caravans under the Sprite, Jurgens, Jurgens Safari and Gypsey brands. It also manufactures
motorhomes under the WJ brand. The conventional caravans market is a niche market and Jurgens is a major participant in this market.
In the off-road caravan ranges Jurgens competes with other manufacturers and does not dominate this market. In the motorhome market
Jurgens is a major participant. These products are sold to the distributors who then sell the products to end users or retailers.
Overlapping activities
[11]
There is no horizontal overlap between the activities of the merging parties. The merger, however, results in vertical integration
in that the target firm, through its dealer network, supplies the acquiring firm’s Maui and Brits rental business with motorhomes,
caravans and roof tents which the latter rents to tourists. Jurgens sells its products to a dealer network. The dealers then sell to retail buyers or rental companies such as Maui and Brits. The dealers are independently owned. At present Maui and Brits only rents Jurgens equipment and not those of any of its competitors
in the motor home business, which we gather from testimony at the hearing is a very small business. Rival motor home dealers will
continue to use their existing networks post merger to rent or sell their products. There are no other domestic suppliers of caravans,
but overseas suppliers who enter the market have their own outlets and again Maui and Brits have not been a source of distribution
for them at present.
Jurgens is by far the most dominant player when it comes to conventional caravans. Its competitors are a small manufacturer of caravans in Roodepoort and a company in the East Rand that imports a range for the top end of the market conventional caravans from the UK. It does not seem
as if there are other foreign companies that distribute caravans. (Record p90 and Transcript p3).
Maui and Brits state that they have 40% of the domestic market. Other firms operate in this market, which have a national network.
Thus although the merger leads to some vertical integration, there need be no concern of post merger foreclosure of rivals by the
merged firm.
Public Interest
[12]
There are no public interest issues.
Conclusion
[13]
This transaction does not raise competition concerns. The transaction is accordingly approved unconditionally.
________________
12 April 2007
N Manoim
DATE
Tribunal Member
M Mokuena and M Holden concur in the judgment of N Manoim
Tribunal Researcher:
R Kariga
For the merging parties:
S Mayet, Tugendhaft Wapnick Banchetti and Partners.
For the Commission
:
K Mahlakoana and H Ratshisusu (Mergers
and
Acquisitions)
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