28 November 2011

Merger proceedings of South African companies in Australia

Pick n Pay

In 2010, Pick n Pay and Metcash entered into a R1,4 billion deal for Metcash to acquire Pick n Pay's Australian chain, Franklins. The Australian Competition and Consumer Commission (ACCC) later made an application to oppose the proposed sale of Franklins to Metcash on the basis that the deal could mean a significant lessening of competition through the removal of Metcash's closest competitor in the New South Wales groceries sector.

In September 2011, Australia's Federal Court decided not to grant the ACCC an injunction to restrain Metcash from acquiring the Franklins supermarket business until a full appeal had been heard. The appeal hearing has been set down for 24 October 2011 and is to be heard over three days.

Pick n Pay reports on its website that should the merger not be approved "Pick n Pay may be forced to sell off pockets of stores to different buyers in a process that could take a long time and will not yield the R1.4 billion it would get from the Metcash sale".

SABMiller

The ACCC has ruled that it will not oppose SABMiller's proposed US$9.78 billion acquisition of the Foster's Group. The ACCC found that the acquisition is not likely to substantially lessen competition in the Australian market for the supply of beer.

At present, SABMiller operates in Australia through Pacific Beverages, a joint venture with Coca-Cola Amatil. Following the acquisition, SABMiller and Coca-Cola Amatil intend to terminate the joint venture so that SABMiller will wholly own Pacific Beverages and Fosters. In its decision, the ACCC noted that the removal of Pacific Beverages as an independent beer producer and supplier is unlikely to raise substantial competition concerns as post acquisition the merged entity will continue to face competition from the second largest player in the Australian beer market (Lion Nathan), smaller beer suppliers, parallel imports and control brands supplied by the major supermarkets.

The proposed merger is still subject to review by other authorities, including Australia's Foreign Investment Review Board.

Nick Altini

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