[10]
The parties submit that the transaction will be effected through a number of interlinked agreements, which are conditional upon each
other. In terms of the structure of the transaction, Risk Reduction International Limited (‘RRI’), a Mauritius corporation, will sell its 100% shareholding in Umlambu Colliery to Yomhlaba Resources or its nominee which shall be a wholly owned subsidiary.
[11]
In addition RRI will sell 76.475% of its shareholding in Ilanga Coal Mine (Pty) Ltd (‘Ilanga Coal’) to the acquiring firm (Royal Bafokeng Capital), and will sell its 10.5882% shareholding in Ilanga Coal to South African Coal Mining
Holdings (Pty) Ltd (‘SACM’).
[12]
Further, the primary acquiring firm, RRI and SACM will sell their Ilanga Coal’s 100% shareholding to Yomhlaba.
[13]
The consideration payable by Yomhlaba Resources to Royal Bafokeng Capital, RRI and SACM in respect of Ilanga Coal’s shares will be as follows:
[13.1]
Yomhlaba Resources will issue 65% of its share to Royal Bafokeng Capital;
[13.2]
Yomhlaba Resources will issue 11% of its share to RRI; and
[13.3]
Yomhlaba Resources will issue 9% of its share to SACM.
[14]
The balance of the shares in Yomhlaba Resources will be owned as follows:
[14.1]
NAMF will own 7.5%; and
[14.2]
Minorities will own 7.5%.
[15]
On completion of the transaction, Yomhlaba Resources will control Umlabu Colliery and Ilanga Coal from RRI. Royal Bafokeng Capital
will control Yomhlaba Resources with 65% shareholding
[16]
The diagram below shows the net effect of the transaction: Record p427.
65%
7.5%
11%
9% 7.5%
100%
100%
100%
Rationale for the transaction
[17]
For the primary acquiring firm, the merger represents the first step towards its goal of establishing a BEE coal mining platform focused
on the acquisition, management and further development of coal mining businesses and related activities in the coal mining industry.
[18]
The transaction will enable the primary target firm to achieve favourable BEE status in accordance with the Codes of Good Practice
published under the Broad-Based Black Economic Empowerment Act, 2003. The merger will also enable the primary target firm to establish a coal mining business
and to lift the suspension of its shares on the JSE Securities Exchange.
The parties’ activities
Primary acquiring firm
[19]
The acquiring group is involved in the following activities:
[19.1]
Rendering risk management and business intelligence consulting services;
[19.2]
supplying of roof support products;
[19.3]
manufacturing and distributing of plastic packaging;
[19.4]
providing freight forwarding, courier and delivery services;
[19.5]
distribution of IT equipment;
[19.6]
manufacturing of automatic components;
[19.7]
platinum and chrome mining;
[19.8]
ferrochrome-smelting;
[19.9]
manufacturing of concrete blocks, ricks and tiles;
[19.10]
manufacturing, distribution and marketing of household and laundry detergent products;
[19.11]
waste management services; and
[19.12]
Manufacturing of wet and dry food products.
The primary target firm
[20]
Through its subsidiary YBA coal, the primary target firm was involved in the business of coal dump discard material recovery mining
operations at Ingwe Colliery, a subsidiary of Billiton plc (‘Billiton’) under contract. YBA Coal has since ceased to carry on that business and is now engaged in a dispute with Billiton regarding the summary termination of its contract in relation to Ingwe
Colliery. The JSE Securities Exchange responded by the listing of the shares of the primary target firm on the Altx board.
[21]
Ilanga and Umlabu are coal mining companies operating in Mpumalanga.
Competition analysis
[22]
There is no overlap in the activities of the merging parties. The transaction is therefore unlikely to substantially prevent or lessen
competition in any market.
Public Interest
[23]
There are no public interest issues.
Conclusion
[24]
The merger is approved unconditionally.
________________
7 June 2007
Y Carrim
DATE
Tribunal Member
M Mokuena and M Holden concur in the judgment of Y Carrim
Tribunal Researcher
:
R Kariga
For the merging parties:
M Ball Metier Advisory (Pty) Ltd
For the Commission
:
I Selaledi, and M Mohlala (Mergers
and Acquisitions)
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