The Competition Commission has recommended that Novus’s proposed takeover of Mustek be approved, with conditions.
In November, Novus said it would make a mandatory offer to acquire all of the technology group’s shares.
On Wednesday, the commission recommended that the Competition Tribunal approve the deal. The tribunal has the final say on competition matters in SA.
“The commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market,” the competition body said.
Local takeover rules stipulate that if any party buys more than 35% of a company’s shares, it must make a mandatory offer to all the other shareholders.
Part of the rationale for this is to protect minority shareholders from the whims of large investors.
Special resolutions usually require a two-thirds vote to be passed. Therefore, when a particular investor reaches 35% ownership, it can effectively block such resolutions unilaterally.
Novus, one of SA’s largest print production and manufacturing operators, is offering a cash consideration of R13 per Mustek share, or R7 cash plus one Novus share, or two Novus shares for each Mustek share.
Mustek, valued at R857m on the JSE, is an assembler and distributor of ICT products, and was established in 1987, with its brand portfolio including Acer, Asus, Samsung and Lenovo.
To address employment related public interest concerns, the merging parties have agreed to a two-year moratorium on retrenchments following the merger implementation date, and preferential employment conditions for employees retrenched by the Mustek pre-merger. The proposed transaction does not raise further significant public interest concerns.
This comes a day after the Takeover Regulation Panel concluded that the DK Trust, a key Mustek shareholder, acted in concert with Novus for the purposes of the mandatory offer.
Key to the matter was the TRP working to determine if the DK Trust’s actions, “particularly its irrevocable undertaking in favour of Novus — wherein it undertook not to accept the latter’s mandatory offer nor dispose of its shares in Mustek until completion of the offer — were integral to the mandatory offer”.
The DK Trust represents the interests of Mustek founder David Kan, who died in May 2022. The trust is the company’s largest shareholder.
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