[7]
The transaction is effected through a number of steps which can be summarised as follows:
[7.1]
As part of this transaction, the furniture business, the
import business (including the bedding and furniture manufacturing divisions) will be transferred into PG Bison. In addition, Bekker
and Steyger (Pty) Ltd (“Bekker and Steyger”) and Roadway Logistics Retail (Pty) Ltd (“Roadway Logistics”)
– (collectively referred to as the Steinfurn subsidiaries) will be transferred into PG Bison.
[7.2]
Platoon will purchase the furniture business, import business,
the Steinfurn subsidiaries and the Property Rental Business from PG Bison.
[7.3]
At the completion of this transaction, Platoon will be controlled
by the AC Consortium and Platoon shall house the furniture business, import business, the Steinfurn subsidiaries and the Property
Rental Business purchased from PG Bison, a subsidiary of Steinhoff.
Rationale for the transaction
[8]
For the primary acquiring group, the merger presents certain strategic initiatives that can be implemented through Platoon, including
BEE transactions that can significantly improve the furniture business, the import business and the roadway logistics business.
[9]
The shareholders of the primary target firm submitted that their strategy is to diversify into other markets as it will improve their
operational level and helps them to introduce a number of initiatives to improve profitability.
The parties’ activities
Primary acquiring firm
[10]
The primary acquiring group is actively involved in the provision of merchant banking, corporate banking and treasury products to
the corporate market.
The primary target firm
[11]
The primary target group is involved in the following business activities through different divisions:
[11.1]
Manufacturing of furniture brands including: Gommagomma, Grafton Everest, Alpine Lounge, High Point, Steinhoff Bedding, Milano Décor,
Victoria Lewis, among others;
[11.2]
Furniture Logistics division which is deals with roadway logistics and regional distribution centre;
[11.3]
The import sub-division which imports lounge furniture, bedroom and dining room suits to supplement the locally
manufactured ranges.
Competition analysis
[12]
There is no horizontal overlap in the products of the parties and there is no vertical integration resulting from this transaction.
[13]
The Commission was concerned that Steinhoff may be able to control Manco whether directly or indirectly since it is providing funding
for Manco to participate in this transaction. This funding is being provided through the subscription for redeemable preference shares
in Manco by Steinhoff. The parties submitted that Steinhoff does not in any way control Manco and that the funding is at arm’s
length and will be on commercial terms. The parties further stated that neither the funding nor the preference shares terms will enable Steinhoff to control Manco’s
30% shareholding in Platoon. In light of these submissions, we did not consider the effects on competition should Steinhoff exercise control of Manco’s
30% shareholding in Platoon.
[14]
The proposed transaction is related to the Steinhoff/BCM transaction involving Steinhoff and BCM Holdings (Pty) Ltd, International Wire Converters (Pty) Ltd and Buffalo Freight Systems (Pty) Ltd. The Steinhoff/BCM transaction was approved subject to the condition that this transaction is implemented. This stems from the fact that the competition
concerns that may have been raised by the Steinhoff/BCM transaction have been removed by the current transaction since Steinhoff is selling its furniture business, including the bedding
manufacturing business.
Public Interest
[15]
There are no public interest issues.
Conclusion
[16]
The merger is approved unconditionally.
________________
9 November 2007
N Manoim
DATE
Tribunal Member
U Bhoola and M Mokuena concur in the judgment of N Manoim
Tribunal Researcher
:
R Kariga
For the merging parties:
Roodt Incorporated
For the Commission
:
G Mudzanani and HB Senekal (Mergers
and
Acquisitions)
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