Wednesday, October 21, 2020

Retail sector leads in acquisitions ÔÇô report

The domestic retail sector registered more transactions of mergers and acquisitions during the financial year 2015/16, the annual report of the Competition Authority has shown. The other sector that had a significant record on merger notifications is the manufacturing sector which recorded five cases as compared to two in 2014. 

The data contained in the report shows that overall the economy registered 33 merger notifications, the retail sector recorded the highest at 12 cases compared to six in the previous year. In 2014/2015 atleast 32 notifications of mergers were submitted to the authority with retail sector still leading with six cases. 

Deputy Chairperson of the Competition Commission Thembisile Phuthego said Monday that of the thirty three (33) notifications, 29 were finalised with 26 approved without conditions while the remaining three were given conditions. 

In August this year, despite resistance by leading retailers including Sefalana Group and FurnMart, the Competition Authority gave a nod to the takeover of Warbler Holdings (Pty) Ltd by businessman, Ramachandran Ottapathu. 

Ottapathu, who is the sole owner of BLUEHEARTS (PTY) LTD, and a director at Choppies Enterprise, a direct competitor of Sefalana Holdings had notified the market of his intention to acquire the entire issued shareholding of Warbler Holdings (Pty) Ltd in IT4Africa (Pty) Ltd; Goldtech (Pty) Ltd; Healthwest Africa (Pty) Ltd; and Solid Logistics (Pty) Ltd in mid July 2016. In mid July, the Competition Authority held a public hearing regarding the intended acquisition where the leading retailers amongst them Sefalana and FurnMart opposed the move. Sefalana, Choppies and FurnMart are all listed companies at the Botswana Stock Exchange. 

The leading retailers made counter arguments against Ottapathu’s intentions classifying it as “unfair” competition. Sefalana which was represented by its managing director Hans Kampann and Group Finance director Mohamed Osman presented a lengthy letter in which they gave details of why they opposed the proposed acquisition. 

“Conditions imposed are usually specific remedies that are meant to address competition and public interest concerns that would have been indentified during the merger assessment”, Phuthego said. 

In the Warbler Holdings case, the Authority said that the proposed transaction is not likely to result in the prevention or substantial lessening of competition, or endanger the continuity of the services offered in the distribution of branded consumer electronics (domestic and commercial) to resellers. 

“The market structure in the distribution of branded consumer electronics (domestic and commercial) to resellers will not be altered as the acquiring entity will be inheriting the position of the target enterprise,” reads part of the lengthy statement issued by the Authority four months back. 

The Authority further stated that in view of the fact that Ottapathu also has controlling interests in enterprises that deal with the retailing of branded consumer electronics – Choppies Enterprises Limited shall for a period of five (5) years from the date of the decision, not enter the market for the retailing of branded consumer electronics currently traded by Warbler Holdings (Pty) Ltd, for as long as he has a stake in Choppies Enterprises Limited.

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