Investec MB Tech

The judgment

The court's own file

competitiontribunal sauth africa fax form to Paul Cleland fax Werksmans Attorneys 011.535 8739 Legal Services 44283 Competition Commission ref 64/LM/Aug11 date 03 November 2011 from Tebogo Mputle pages 4 (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. 2 Tebogo Mputle . CC: Bheki Masilela - 44582 3 Floor, Mulayo, the dti Campus, 77 Meintjies Street, Sunnyside, Pretoria &] Private Bag X24, Sunnyside 0132 Tel: +27 (12) 394 3300 Fax: +27.(412} 3940169 Email: ctsa@comptrib.co.za Website: http:/Avww.comptrib.co.za corpetitiectribunal veath afeied COMPETITION TRIBUNAL OF SOUTH AFRICA Case No:64/LM/Aug11 In the matter between: INVESTEC Acquiring Firm And MB TECHNOLOGIES Target Firm Panel : Norman Manoim (Presiding Member), Andiswa Ndoni (Tribunal Member) Medi Mokuena_ (Tribunal Member) Heard on : 26 September 2011 Order issued on : 26 September 2011 Reasons issued on : 27 October 2011 Reasons for Decision Approval

[1]On 26 September 2011 the Competition Tribunal (“Tribunal”) approved the large merger between Investec Bank Limited (“IBL”) and MB Technologies (Pty) Ltd. The reasons for approving the proposed transaction follow below. The Parties to the transaction

[2]The primary acquiring. firm is. Investec Bank Limited (“IBL”), an international banking group, principally providing financial services. IBL provides advisory and private equity, investing and wealth management, cash investment and banking services, lending and finance and aiso trading. iBL also has interest in numerous sectors amongst others chemicals, construction, engineering, petrochemicals, minerals, food, hotel, IT and Investment. IBL is controlled by Investec Limited CInvestec’). :

[3]The primary target firm is MB Technologies (Pty) Ltd (“MBT’), a private company incorporated in terms of the laws of the Republic of South Africa. MBT provides services within the information technology sector (“IT”) predominantly the sale of IT equipment. MBT also provides brokerage services relating to procuring finance for its customers for the purchase of IT equipment (“financial brokering services”) but does not itself provide actual capital or financing.

[4]IBL lent monies to one of the shareholders of MBT (The Agusta Trust) as well as an individual linked to the Trust (Leo Baxter): As security for the loan, IBL was granted various forms of security which included a pledge and cession by the Agusta Trust of all shares which it held in MBT and RB MBT. In April 2010 an agreement was reached between IBL, Leo Baxter and the Baxter entities where it was contemplated that the Agusta Trust would sell its entire shareholding in RB MBT and approximately 11.98% of its shareholding in MBT to IBL. In terms of the Merger Agreement IBL is acquiring 45% of the issued share capital in MBT. RB MBT. has an 81.07% shareholding interest in MBT this-is the issued share capital prior to the transaction. Post transaction, the direct shareholding in MBT will be Investec 45% and RB MBT 55%. On 1 April 2011, RB MBT and IBL concluded a shareholder’s agreement to govern their relationship as shareholders of MBT which agreement includes certain reserved matters or “minority protections” in favour of IBL. Accordingly, IBL has the ability to exert material influence over MBT from 1 April 2011. The Rationale

[5]IBL is exercising its option to take control of assets over which the security has been registered, .by levying the execution of assets, in the event of default. From the perspective of the sellers they acknowledge that IBL had certain security interests which it wished to exercise and this transaction allows !BL to exercise those rights without any disruption to the affairs of MBT. The relevant market and the impact on competition.

[6]Investec Bank Limited is an international banking group, principally providing financial services. it provides advisory and private equity, investing and wealth management, cash investment and banking services, lending and finance and also trading whilst MBT is an IT equipment distribution firm. It provides services within the IT sector, specifically the sale of IT equipment. The only services related to finance that the primary target firm provides is financial brokering services for its clients that purchase IT equipment. The primary target firm does not itself provide capital or financing.

[7]The Commission took into account that Investec has a 25% stake in IT through MSG Africa, a managed security service provider (MSSP), focusing. mainly on e- mail security, web security, e-mail hosting and e-mail archiving. The services of MBT are different from those of MSG Africa and therefore there is no horizontal overlap in the activities of the merging parties with regards to IT services.

[8]The Commission found that there is a vertical integration in the activities of the merging parties as Investec putchases laptops from MBT and MBT can be ina position to refer its clients to Investec as it.is active in financial brokering. The Commission however took into account that the vertical overlap with regard to the sale of laptops is minimal and accounts to about 0.7% of MBT’s turnover and there are other alternative sources for the provision of laptops. With regards to financial brokering the Commission noted that there are other big financial brokering companies like PSG and Allan Gray that the customers can use. in light of the above, the Commission submitted that the reciprocal vertical relationships brought about by the merger are minimal.

[9]The Commission found that there is no overlap in the activities of the merging firms as IBL is not active in the provision of IT equipment. The proposed transaction also raises no public interest concerns. CONCLUSION

[10]We agree with the Commission’s conclusions and accordingly, the merger is approved. without conditions. 27 October 2011 NORMAN MANOIM DATE i A Ndoni and M Mokuena concurring. Tribunal Researcher: Thabo Ngilande For the merging parties: Werksmans Attorneys For the Commission: Mr Bheki Masilela Ms Lindiwe Khumalo x «x ¥ Communication Result Report ( 3. Nov. 2011 13:14) * & Date/Time: 3, Nov. 2011 12:52 File No. Mode Destination Pe (s} Result 7745 Memory TX 00115358739 Pp. 4 OK tebogo 44283 OK 4458? OK Reason for error E.1) Hang up of Fine fail E.2) Busy E. 3) No answer —. 4) No facsimile connection E. 5) Exceeded’ max. E-mail size ecampetitiontribunal south africs | fax form to Paul Cleland fax Werksmans Attomeys 011 535 8739 Legai Services 44283 Competition Commission ref G4/LMfAug14 date 03 November 2011 from Tebogo Mputle pages 4 (including this page) re Reasons “This message is Intended only for the use of the addressee and may contain information that ie privileged and confidential. 1 you are not the intended recipient, you are hereby notified that any dissemination of this communication is stictly prohibited. If you have received the communication in error, please natty us immediately by telephone. Attached please find the Tribunal’s reasons for the decision in the above matter. Regards ib. Tebogo Mputle CC: Bheki Masilela - 44582 3" Floor, Mulaya, the dil Campus, 77 Meintjiss Street, Sunnyside, Pretoria By Private Say X24, Sunnyside 0132 Tel: +27 (12) 384.3300 Fax +27 (12) 384.0169 Email: c Website: hitp-rwww.camptrib Page Not Sent