HCI KWV

The judgment

The court's own file

competitiontribunal South africa fax form to Mark Garden Fax Edward Nathan Sonnenbergs Inc 011 269 7899 Legal Services 44283 Competition Commission ref 26/LM/|Jan11 date 06 May 2011 from Abigail Mashigo pages 6 (including this page) re Reasons This message is intended only for the use of the addressee and may contain information that is privileged and confidential. If you are not the intended recipient, you are hereby notified that any dissemination of this communication is strictly prohibited. If you have received this communication in error, please notify us immediately by telephone. Attached please find the Tribunal’s reasons for the decision in the above matter. Regards dency Abigail Mashigo CC: Lameez Vania - 44293 3m Ficor, Mulayo, the dti Campus, 77 Meintjies Street, Sunnyside, Pretoria & Private Bag X24, Sunnyside 0132 Tel: +27 (12) 3943300 Fax: +27 (12) 394.0169 Email: ctsa@comptrib.co.za | Website: http:/Awww.compitrib.co.za competitiontribunal Fearh afr eee COMPETITION TRIBUNAL OF SOUTH AFRICA Case No:26/LM/Apr11 In the matter between: Hosken Consolidated Investments Limited Acquiring Firm And KWYV Holdings Limited Target Firm Panel : Norman Manoim (Presiding Member), Yasmin Carrim (Tribunal Member) Andreas Wessels (Tribunal Member) Heard on : 04 May 2011 Order issued on : 05 May 2011 Reasons issued on : 06 May 2011 Reasons for Decision Approval

[1]On 4 May 2011 the Competition Tribunal (“Tribunal”) approved the large merger between Hosken Consolidated investments Limited (“HCI’) and KWV Holdings Limited (“KWV’). The Tribunal’s reasons for approving the transaction are set out below. The Parties to the transaction

[2]The primary acquiring firm is Hosken Consolidated Investments Limited,’ a public investment company listed on the Johannesburg Stock Exchange. HCl’s major shareholder is the South African Clothing and Textile Workers Union CSACTWU’) with 37.9% of the issued share capital in HCI. * htto:/Avww.hci.co.za/ 1

[3]The target firm, KWV Holdings Limited,? is a JSE listed public investment company which owns and operates one of the leading wine and spirits producers in South Africa. HCI currently owns 34.95% of the issued share capital in KWV.

[4]HCi has been involved in a number of transactions increasing its stake in KWV with the goal of attaining sole control of KWV. This proposed transaction is a further step by HCI towards their goal. The activities of the parties

[5]The Acquiring Firm: HCI has investments in a diversified range of business areas and industries such as Media & Broadcasting, Casinos, Hotel & Leisure, Clothing & Textiles, Transport, Energy, Property and Technology: Gaming Hotels and Leisure -FS060 SIN GROUP Nude, Gaming 4 Entectsiamand aE TSOGO INVESTMENT HOLDING COMPANY VUKANI GAMING CORPORATION T4.7% 100% Media and Broadcasting [A isat.v MIDI TV (e.TV) YIRED ESAT.TV 63% 63% B3% THREE BLIND MICE COMMUNICATIONS TA3% Transport C&D GOLDEN ARROW BUS SERVICE 400% Energy Khusela Cia MONTAUK ENERGY CAPITAL HCI KHUSELA COAL 84.5% 80% 2 nttp://www.kwv.co.za/ 2 Property and Exhibitions GALLAGHER SE estate : GALLAGHER i 100% Industrial eformex FORMEX 90% Services and Technology aera pa re ae. Ce aes Business Systems Group (Africa) Syntell Isilumko Limtech 40% BB% 30.1% 58.9% Clothing and Textiles Gi) SEARDEL PBRGS BeH BST GDR LaBare Searde! Limited 70% The above Graphic Table is from the HCI website.*

[6]The Target Firm: a. KVWV is essentially a vertically integrated wine and spirits business, owns a wine farm, and procures grapes and wine for the production of wine and spirits. KWV owns one of the largest premium brands of wine in the country and also has a non controlling interest in the Paarl Bottling Company. b. KV controls the following subsidiaries: KWV South Africa (Pty) Ltd; KWVV International (Pty) Ltd; KWVV Intellectual Property (Pty) Ltd; KWYV Projects (Pty) Ltd; Kaapse Wynprodusente Vereniging (Pty) Ltd: Wijngaarg Beleggings (Pty) Ltd; Edward Cavendish and Sons (Pty) Ltd; KWYV International Holdings Gmbh; KWVV International (Europe) Ltd; and Golden Kaan South Africa (Pty) Ltd.@¢ @ @ © @ @ © @ ® 5 http://www.hei.co.za/corp_profile.htm 3

[7]There is no overlap between the activities of the merging parties nor are there any firms in the broader acquiring firm in a vertical relationship with the target firm. The Rationale

[8]Through the present transaction, HCI intends acquiring 0.05% of the issued share capital of KVVV as a further step in its goal of attaining sole control of KWV.

[9]The result of the acquisition of the 0.05% will result in HCI owning 35% of the issued share capital of KWV and thereby become obliged, in terms of the Securities Regulation Panel (“SRP”) Code to extend a mandatory offer to the other shareholders of KWV.

[10]Depending on the extent of the acceptance of the mandatory offer by the other shareholders, HCI could be placed in a position to acquire the entire issued share capital of KWV.

[11]HCI further states that by acquiring sole control of KWV, it would be in the position to employ its skilled management team in turning around KWV’s underperforming business. This goal seems to correlate with HCI’s role as an investment company. The relevant market and the impact on competition-

[12]The parties and Commission agree that the relevant market is the market for the production and sale of bottled wine, bottled spirits, bulk spirits, contract for bottling and carbonated grape juice.

[13]There is no overlap in the activities of the parties and the Commission is of the opinion that that this merger is unlikely to substantially prevent or lessen competition in the relevant market. Public Interest

[14]The merging parties have notified the Food and Allied Workers Union (“FAWU”) in their capacity as the employees’ representative and no employment issues were raised. Conclusion

[15]We agree with the Commmission that as there is no overlap between the activities of the merging parties nor vertical integration, the merger does not raise any competition concerns Furthermore no public interest grounds have been raised that would not justify approval of the merger.

[16]Accordingly, the above merger is approved without conditions. N Manoim 06 May 2011 DATE Y Carrim and A Wessels concurring. Tribunal Researcher: For the merging parties: For the Commission: Songezo Ralarala Mark Garden and Ruthendo Hlatshwayo of Edward Nathan Sonnenbergs, Lameez Vania, Mfundo Ngobese, Marien van Hoven x x ¥ Communication Result Report ( 6 May. 2011 9:40} x « x No Date/Time: 6.May. 2011 9:32 File Page No. Mode Destination Pz {s) Result Not Sent 7274 Memory IX 44993 P, 6 OK David 44983 OK 00112697899 Ok Reason for error .1) Hang up or line fail E.2) Busy —.3) No answer E.4) No facsimile connection E.5) Exceeded max. E-mail size competitionvibunal 4 sonth africa fax form to Mark Garden fax Edward Nathan Sonnenbergs Inc 014 268 7899 Legal Services 44283 Competition Commission ref 26/1.M/[Jan41 date 08 May 2011 from Abigali Mashigo pages 4 Gnoluting this page) re Reasons ‘Thio message [s intended only fur the use ofthe addressee and may contain information that is privieged and confidential, I'you are not the bifended recipient, you are hereby noBted that any dissemination of this icetion is stiady prohibited. Ifyou have received this ‘communication in error, plesse nofly us immediatly by talephons, Attached please find the Tribunals reasons for the decision In the above matter. Regards Abigail Mashigo CC: Lameez Vania- 44283 3 Foor, Mulayo, the di Campus, 77 Meinffen Steeat, Sunnyside, Pretoria a Private Bag X24, Sunnyside 0192 Tel: +27 (12) 394 8300 Fax; +27 (12) 3960469 Emett ctsaQoomptib.co.ze Website: hiipivedr.comptib.coza