The Competition Tribunal has approved the Shoprite Group’s proposed transaction to buy numerous Massmart-owned wholesalers, supermarkets, and liquor stores, but with extensive conditions.
Shoprite initially made an offer to buy 56 grocery stores from Cambridge Food and Rhino Cash and Carry and 43 adjacent liquor stores earlier this year. It also wanted to buy 10 wholesale cash and carry stores, 2 wholesale liquor stores, Massfresh and Fruitspot. It made an offer of R1.36 billion to Massmart. The Competition Commission recommended that the Tribunal approve the deal in May.
However, during a recent three-day merger hearing, interveners Pick n Pay and Spar argued for the transaction to be blocked.
Shoprite, Massmart, the Department of Trade, Industry and Competition, and the South African Commercial Catering and Allied Workers Union (Saccawu) also participated in the hearing.
The Tribunal announced on Sunday that after a three-day merger hearing and various information requests, it has approved the proposed transactions with certain conditions to address identified competition and public interest concerns, including a condition that Massmart divest from ten stores identified as “highly problematic”.
A non-confidential version of the conditions will be made available on the Tribunal website in due course. But among other things, it wants some of the targeted “highly problematic stores” to be sold to other retailers not related to Shoprite, and some preferably to black retailers.
“After considering the commission’s recommendation and the submissions of the participating parties, the tribunal ultimately approved the proposed merger on the basis that the 10 highly problematic stores must be divested by Massmart to a suitable purchaser/s within a specified period from the tribunal’s approval from the merger,” the tribunal said.
It said the third parties must be small or medium-size businesses or historically disadvantaged persons. But they must have the necessary financial resources to acquire those stores and proven technical expertise to develop them into viable and competitive businesses where they are situated.
Source: News24, My Broadband, Moneyweb, image from Twitter: @StartupMagZA