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Tribunal releases reasons for approval of Magnesium, Mimecast merger
subject to public interest conditions
The Tribunal has released the reasons for its decision to conditionally approve the merger between Magnesium Bidco Limited (“Magnesium”) and Mimecast Limited (“Mimecast”). The proposed transaction involves Magnesium acquiring the entire share capital of Mimecast.
The Tribunal approved the merger subject to conditions involving the target group’s continued contribution to various Broad-Based Black Economic Empowerment (“B-BBEE”) initiatives. The Tribunal concluded that the proposed merger, viewed alongside the conditions imposed on the transaction, will have a positive impact on the public interest. The order and full reasons can be downloaded from the Tribunal’s website at https://www.comptrib.co.za/case-detail/19891. A summary follows below:
Competition assessment
The Tribunal concluded that the proposed merger is unlikely to substantially prevent or lessen competition in any market in South Africa.
Public interest assessment
Neither the acquiring group nor the target group are held by historically disadvantaged persons (“HDPs”). However, the target group contributes to multiple B-BBEE initiatives. The merging parties agreed to a condition that the B-BBEE initiatives (that the target group contributes towards) should continue post-merger for a minimum, specified period. The Tribunal therefore approved the proposed merger subject to conditions.
Merger conditions
For a minimum specified period following the merger implementation date, the merging parties will ensure that the target group will contribute, in minimum specified amounts, to the following initiatives per annum:
- Skills development involving:
- external bursaries for underprivileged individuals, including stipends;
- external bursaries for students with disabilities;
- training (including bursaries) for RSA Mimecasters;
- the Youth Employment Services (“YES”) programme; and
- a mentoring programme - Partners for Possibilities.
- Supplier development;
- Enterprise development; and
- Socio-economic development.
The merging parties
Magnesium is a newly incorporated entity registered in accordance with the laws of England and Wales. Magnesium is ultimately controlled by Permira Holdings Limited.
The acquiring group, through its portfolio companies, is active across the consumer, financial services, healthcare, industrial, and technology sectors. In South Africa, it is active in the broader market for the supply of information technology (“IT”) services. Through McAfee Security South Africa (Pty) Ltd (“McAfee”), the acquiring group is active in the wider supply of security software, specifically consumer cybersecurity software solutions. McAfee provides consumer-level cybersecurity software solutions.
Mimecast is a company registered in accordance with the laws of Bailiwick of Jersey. Its ordinary shares are listed on the Nasdaq Global Select Market and it is not controlled by any firms. In South Africa, Mimecast controls Mimecast South Africa (Pty) Ltd.
The target group provides cloud security and risk management services for email and corporate information through proprietary cloud services that protect enterprise customers from significant business and data security risks they are exposed to through emails and other corporate systems.
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