By: Nghiinomenwa-vali Erastus
Various companies are taking advantage of synergies and other values that can be achieved in horizontal and vertical integration in the market.
This conclusion is found after the country’s competition watchdog, the Namibia Competition Commission (NaCC) has reported that it has approved 12 mergers and acquisitions.
This involves inclusion of more than seven local companies taking over each other, regional companies, and two international corporations buying local assets or companies.
NaCC has indicated that it has not objected to any of the presented mergers and acquisitions cases, and they were all approved without conditions, except one which was approved with conditions due to its potential impact on competition and employment.
The proposed transactions between Vivo Namibia and Gasit as well as 2M Promotions and RUIMTE, were approved, but with conditions, and reporting on certain moves for the two companies are to seek greenlight from NaCC.
Vivo Energy Namibia Limited (Vivo Namibia) is acquiring the assets and business conducted by Triple J Energies Proprietary Limited (Triple J) which is trading under the business name ‘GasIt’ (the GasIt Business).
The Vitol Group, founded in 1966, is a large independent energy marketing and trading group of companies.
In Namibia, The Vitol Group is currently active in the trading of refined petroleum products (petrol and diesel) and through Validus is engaged in the commercial distribution of fuels.
Vivo Namibia is both physically present and active in Namibia, with its primary business activities being to market, sell, and distribute petroleum products (through its Shell-licensed brand) to customers in Namibia.
In addition, Vivo Namibia also provides a non-fuel retail offering via the operation of convenience retail shops and quick service restaurants in Namibia.
The primary target undertaking, Triple J, using the trade name ‘GasIt’, is a 100% Namibian liquefied petroleum gas (LPG) bulk and cylinder distribution company and has been operating as such since 2012.
The GasIt Business is focused on supplying LPG safely and cost-effectively to all sectors of the market.
A competition analysis done by NaCC on merger revealed that it would result in a substantial lessening or prevention of competition in the relevant market.
“The conclusion is reached due to the likelihood of the implementation of the merger to result in foreclosure, raising of rivals’ cost, and raising barriers to entry,” the statement read.
NaCC added that there are no formidable competitors with capacity compared to that of the merged entity’s capacity to be borne out of the implementation of the proposed merger to constrain merging parties.
“Specifically, the implementation of the proposed merger points to the fact that the merged entity is highly likely to materially change the parties’ economic incentives to engage in anti-competitive behaviour that could harm competition by engaging in foreclosure strategies and raising rivals’ costs, due to their dominance,” the statement read.
This is due to the lack of regulation of the LPG market and the merging parties’ geographical reach, in case they decide to engage in any anti competitive conduct.
The proposed transaction will also have a negative impact on employment.
As the sale entails 98% of the seller’s business, however, such a sale did not include employees and as such to protect the employment of the 21 employees, an employment condition is recommended.
To address any vertical concerns following the proposed transaction, the Commissioners approved the acquisition with certain conditions.
One is that the supplying entity is expected to adhere to supplying Namibian LPG customers that operate at the level of the target undertaking on an arm’s-length basis and with the same terms and conditions.
This includes a pricing methodology independently set by the supplying entity, (which pricing methodology was last used by Vita Gas in relation to the target undertaking before Vita Gas’ exit from the Sunrise terminal in Saldanha Bay, South Africa).
Secondly, any changes to the pricing methodology (which may happen from time to time) will be made available by the supplying entity to NaCC before implementation.
If there is a shortage of LPG in the Namibian market, once the acquisition happens and they have volumes of LPG, the merger shall supply its Namibian competitors.
The conditions are subject to a 5-year review upon which parties will provide any relevant evidence for consideration to amend, cancel, or strengthen any of the conditions by the Commission.
In terms of employment conditions, there shall be no retrenchment of the 21 employees employed by the seller’s business for a minimum period of 3 years.
Another big acquisition that was approved by the Commissioners is the acquisition of the Strongbow licence from Heineken by Cider House Investments (Pty) Ltd (CHI).
The merger is in response to a condition imposed by NaCC on the Heinekens’ acquisition of NBL and Distell requiring the divestiture of the Strongbow brand to a licensee.
The proposed transaction intends to satisfy that condition.
According to NaCC, this transaction will result in the entry of CHI into the market, which was previously absent.
The proposed merger will therefore increase the number of competitors in the relevant product market, which is the market for the production, sale, and distribution of FAB in Namibia.
Other mergers and acquisitions are of M Promotions (the simplified joint-stock company) and Ruimte (Pty) Ltd.
Diroyal Motors (SWA) (Pty) Ltd was approved to acquire sole ownership of and control over the Ford Automotive Dealership Business of Indongo Ford (Pty) Ltd in Oshakati Automotive Business of Indongo Ford (Pty) Lt.d
Life Healthcare Group Proprietary Limited acquisition of the dialysis services business of Fresenius Medical Care South Africa Proprietary Limited (known as the “NephroCare Division”).
Upon completion of the proposed transaction, the target undertaking will become the sole controller of the Dialysis Services Business.
A property managers merger entails the acquisition by Polyoak Properties Pty Ltd (Polyoak Properties ZA) of 100% of the issued share capital, as well as the loan claims of Plaspack Properties Prosperita (Pty) Ltd (PPP).
Sturdee Energy Namibia (Pty) Ltd acquisition of the shares of Expanded Infrastructure Fund (EIF) in Aloe Investment Number Twenty-Seven (Pty) Ltd (Aloe).
Fifteen companies (Thunderstruck) are selling their entire issued share capital to Pupkewitz Property (Windhoek) Pty Ltd.
Thunderstruck individually owns portions of immovable property and cumulatively owns the entire property.
As such, the transaction was filled as an indivisible transaction.
Another acquisition involves the issued and to be issued, share capital in Network International Holdings Plc by BCP VI Neptune Bidco Holdings Limited.
Puma Energy (Namibia) (Pty) Ltd was given the green light to purchase the business of True-Gem Investments Close Corporation.
Puma Energy is an integrated energy company operating in more than 40 countries globally, primarily active in retail, wholesale, and distribution of refined petroleum products.
Puma Energy also owns and operates a number of midstream infrastructure assets (including storage facilities and marine terminals).
The primary target undertaking is the business of True-Gem Investments Close Corporation (True-Gem Investments), currently operated as a “Puma Service Station”.
Bruwer Swanepoel was allowed to acquire 50% of members’ interest in Grasta Karibib Engen CC (Grasta).
The Commission explained that it has the authority, in terms of Section 48(1) of the Act, to revoke a decision approving the implementation of a proposed merger.
The revocation will happen if the decision was based on materially incorrect or misleading information for which a party to the merger is responsible.
Or perhaps any condition attached to the approval of the merger that is material to the implementation is not complied with. Email: erastu@thevillager.com.na
