The Competition Tribunal has conditionally approved the large merger whereby TLG Midco (Pty) Ltd (“TLG Midco”) intends to acquire The Logistics Group (Pty) Ltd (“TLG”). Post-merger, TLG MidCo will exercise control over TLG.
 
Merger conditions
 
The Tribunal has approved the merger subject to conditions relating to the implementation of an empowerment transaction that involves increasing the levels of ownership by historically disadvantaged persons.
 
The HDP transaction entails the acquiring group’s commitment to transfer a shareholding of no less than 25% in TLG Acquisition Holdings (Pty) Ltd (“TLG Acquisition Holdings”) to one or more HDPs. “HDPs” mean historically disadvantaged persons, as defined in section 3(2) of the Competition Act.
 
TLG Acquisition Holdings controls TLG Midco.
 
Competition and public interest assessment
 
The Tribunal concluded that the proposed transaction will not lead to any substantial prevention or lessening of competition in any relevant market in South Africa.
 
Furthermore, the proposed transaction will not have a negative effect on employment and will not result in any retrenchments or redundancies.
 
Regarding the level of ownership, pre-merger TLG derives its black economic empowerment (“BEE”) status from a structure in terms of which the FPT Group BEE Trust owns a 51% stake in TLG Empowerment Holdings Proprietary Limited which, in turn, owns a 26% stake in TLG SA Holdings Proprietary Limited (“TLGSH”). There is therefore no empowerment partner as a shareholder of TLG directly. TLGSH is only one of the many subsidiaries within the TLG Group.
 
Old Mutual Group wishes to implement a new black economic empowerment structure at the TLG shareholder level, by procuring a black economic empowerment partner as an indirect shareholder of TLG, holding no less than an effective 25% equity interest in TLG.
 
The Tribunal found that the HDP transaction, as provided for in the imposed conditions, has a positive impact on the public interest as it increases the post-merger levels of ownership by HDPs.
  
The merger parties
 
TLG MidCo and TLG Acquisition Holdings were established for the purposes of the proposed transaction and thus do not undertake any business activities. TLG Acquisition Holdings will be controlled by the following firms: (i) AIIF4 Seed Partnership acting through AIIF4 Seed General Partner (Pty) Ltd; (ii) Old Mutual Life Assurance Company (South Africa) Limited in respect of the pooled portfolio of assets of the Infrastructural, Developmental and Environmental Assets Managed Fund (“IDEAS”); and (iii) Mokobela-Shataki Consortium (South Africa).
 
The TLG Group operates strategic logistical and terminal assets in Southern Africa including port and rail terminal services, warehousing facilities, stevedoring (loading or offloading cargo to or from a ship) facilities and digital transport technology services.