According to a Dec. 18 statement from the Competition Commission of South Africa, the regulator approved several deals, including the acquisition of Spar Encore by Spar Group and Griekwaland Wes Korporatief by VKB Beleggings.
1. Spar Group / Spar Encore
The Commission has recommended that the Tribunal approve the proposed transaction whereby the Spar Group intends to acquire Spar Encore, with conditions.
✔️ The Spar Group is active as a wholesaler and a retailer of grocery products; liquor; building material; and pharmaceutical products. The Spar Group is a supplier of private-label products.
✔️ Spar Encore is jointly controlled by the Spar Group and an individual. Spar Encore is active in the sourcing, packing, warehousing, and delivery of private-label products manufactured by second and third-tier private-label manufacturers. Spar Encore supplies all its private label products to the Spar Group. These private label products range from perishable to non-perishable products and general merchandise products such as sugar; dairy products; chicken; frozen chips; cheese; and tissues amongst others.
To ensure that the merged entity promotes entry and participation in the economy, the Acquiring Firm has agreed to localise the procurement of at least 30 goods it currently purchases from foreign manufacturers and in the future procure those 30 goods from South African manufacturers.
The Commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets. The Commission further found that the proposed transaction does not raise any public interest concerns.
2. Food Lover’s Market South Africa (“FLM SA”) / Everfresh Market Ballito; Riverbend Trade and Invest 11 t/a Food Lover's Market Arbour Crossing; Everfresh Market Hillcrest Proprietary Limited t/a Food Lover's Market The Crescent (collectively “Target Firms”)
The Commission has recommended that the Tribunal approve the proposed transaction whereby FLM SA intends to acquire the Target Firms, with conditions.
✔️ Food Lover’s Holding is the holding company and franchisor in respect of Food Lover’s Market and comprises divisions such as corporate retail stores, meat processing facilities, distribution centres, import and export businesses, and food production businesses.
✔️ Food Lover’s Market is a South African supermarket chain compromised of franchised and corporate-owned grocery stores which retail a wide range of fast-moving consumer goods (FMCGs). The FMCG products include fresh produce, dry groceries, butchery products, perishables, beverages, personal care, household groceries, baked goods, and confectionery.
✔️ The Target Firms are Food Lover’s Market Ballito; Food Lover’s Market Arbour Crossing and Food Lover’s Market Crescent. The Target Firms conduct franchised stores under the Acquiring Group’s Food Lover’s Market chain of corporate and franchised stores. The Target Firms operate in the grocery retail market in Durban.
The Commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets. With regard to public interest, the Commission considered the likely implications of the proposed transaction on the promotion of a greater spread of ownership and the ability of small and medium businesses owned or controlled by HDPs to effectively enter into, participate in or expand within the market. To promote a greater spread of ownership, FLM SA has agreed to ensure that several of the future stores it will open in the KZN region will have a significant HDP component – either by being wholly owned and operated by HDP franchisees or being co-owned by FLM SA and HDP franchisees.
Further, in the event that FLM SA opens additional franchised stores in the KZN region in the next five years, it shall endeavour to ensure that the ownership structure contributes to a greater spread of ownership. In addition, FLM SA shall ensure that the Target Firms’ stores will continue to procure from existing small to medium and/or HDP suppliers for a period of five years from the implementation date.
3. VKB Beleggings Proprietary Limited (“VKB”) / Griekwaland Wes Korporatief Limited ("GWK")
The Commission has recommended that the Tribunal approve the proposed transaction whereby VKB intends to acquire GWK from current GWK shareholders, with conditions.
✔️ GWK has a diversified range of activities related to the agriculture industry, and operates, mainly in the Northern Cape province, in four main divisions: GWK Agri, GWK Farm Foods, GWK Trading, and Professional Services.
✔️ In terms of the Proposed Transaction, the relevant activities of VKB and GWK are the grain storage and handling, grain trade and procurement, grain milling, trade retail, and agricultural finance businesses.
The Commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets. The Commission considered the likely implications of the proposed transaction on employment, promotion of a greater spread of ownership and the ability of small and medium businesses owned or controlled by HDPs to effectively enter into, participate in or expand within the market.
To address employment concerns, the merging parties have agreed not to retrench any employees as a result of the merger for a period of three years. In order to ensure the promotion of a greater spread of ownership, the merging parties have also agreed to ensure that all qualifying workers will become beneficiaries of the VKB employee share ownership programmes. In addition, the merging parties shall provide financing, in terms of the applicable credit policies and relevant legislation, to HDPs in the value chains and the geographical areas where the merging parties operate (currently and in the future) over a period of 36 months from the implementation date.
Source: CompCom.co.za
