The Competition Commission has recommended to the Competition Tribunal that it approve Robor’s proposed acquisition of Macsteel’s tubes and pipes business (MT&P), but with conditions.
Robor intends to acquire Macsteel, in respect of its tubes and pipes business (MT&P). As a consideration for the acquisition of MT&P, Robor will issue controlling shares to Macsteel. Thus, on completion of the proposed transaction Robor will be jointly controlled by Robor and Macsteel.
Robor through its tubes and pipes business (RT&P) is a manufacturer and a distributor of welded steel tube and pipes, cold formed steel profiles and associated value added products. RT&P product range comprises of hot and cold rolled tube and sections, cold formed steel sections, conveyance or piping systems, coil, sheet and plate, conveyor, tube and associated products, access scaffolding and associated products, structural steel products and value added products. RT&P’s main operations consist of two production facilities in the East Rand of Johannesburg, with sales representatives in various territories, including Durban, Port Elizabeth and Cape Town.
MT&P is owned and controlled by Macsteel. MT&P produces tube and pipe products, which it distributes across Southern Africa. MT&P’s tubes and pipes production facility is located in Lilianton, Boksburg, Gauteng, from which distribution takes place throughout South Africa. This business unit forms and welds steel strips to produce standard welded steel T&P. MT&P also offers value add services for the tube and pipe products. MT&P’s production of standard tubes and pipes is limited to small bore products. This includes structural steel tubes and straight line steel pipes. Structural steel tubes are typically used as a construction element and form of support in built structures, mining support systems, fencing, hi-tensile scaffolding and furniture. Conveyance pipes are used for the transmission of liquids, oils and gasses. These conveyance pipes find application in household plumbing and heating solutions, irrigation solutions and conveyance solutions in the mining industry.
The commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in the relevant markets; however, it determined that the proposed merger would have a negative effect on employment, with about 311 employees to be negatively impacted on as a result of the transaction.
The commission imposed a condition that Robor ensure that the 311 affected employees have the right of first refusal in the event that vacancies become available within the merging parties’ businesses.
The commission also imposed a condition that the merging parties do not retrench any additional employees as a result of the proposed merger.