SA firm takes over CA Sales

Brian Benza
Staff Writer | Friday January 27, 2012 00:00

 

The conditions are that the new entity will not use the exclusive contracts CA Sales has with manufacturers of certain goods and commodities to abuse its massive market power in Botswana.  PSG consists of 35 underlying companies with a combined market capitalisation of R71 billion that operate across industries that include financial services, banking, agriculture, education, construction, manufacturing, mining and energy saving.

In a statement released yesterday, the Authority says the two entities approached it seeking approval of a proposed takeover in which PSG sought to acquire the entire issued shares in CA Sales, one of Botswana's largest sales, merchandising, warehousing and distributors of fast moving goods and commodities.

The JSE-listed PSG, which owns Capitec Bank in South Africa, is not active in the Botswana market while CA Sales is a dominant company in Botswana, distributing key brands like Unilever, Tiger Brands, Distell Botswana, Colgate Palmolive and GlaxoSmithKline.

 In considering the acquisition, 'the Authority took cognisance of the fact that the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of the business due to the fact that there is no overlap (product or geographical) in the activities of the parties to the transaction in Botswana', the statement says.

 'The (Authority) also considered that the proposed transaction will have no significant negative effect on public interest in Botswana in terms of employment in that no retrenchments or redundancies are expected to occur at CA Sales in Botswana by virtue of the implementation of the transaction.'

The CA Sales Group, which boasts an annual turnover in excess of P1.5 billion, owns a fleet of 120 trucks that range from 4ton to 30ton rigs. CA Sales and Distribution, which employs over 1,200 staff and has warehouse facilities in Gaborone and Francistown, has a combined carrying capacity of over 45,000 tonnes of foodstuffs and household goods. Its recently opened P150 million warehouse in Gaborone is able to distribute to 400 serving points countrywide. In approving the acquisition, the Authority, which was only officially launched yesterday in Gaborone, says it has set conditions in accordance with powers of the Competition Act. The statement continues:

'In considering the market power of CA Sales in Botswana, the Authority has approved the proposed merger with conditions that CA Sales shall not engage in any practice in the market with a potential effect of abusing its market power in view of the exclusive contracts they have with Unilever, Tiger Brands, Distell Botswana, Colgate Palmolive and GlaxoSmithKline, among others.

'In view of the past ownership of Global Holdings (Eagle Agencies, 3D Marketing and Leon Baker Agencies) by PSG Financial Services, (recognising that PSG Financial Services no longer has direct interest in Global Holdings), CA Sales shall not be expected to enter into any horizontal or collusive agreements without prior notification to the Competition Authority.'

The CA Group of Companies comprises CA Sales and Dafin Sales, which are the two sales and distribution arms of the Group, as well as warehousing services, Kalahari Sales and Winchester Properties.