MB Technologies Securedata

The judgment

The court's own file

cerpaltiontibunal SER EPR COMPETITION TRIBUNAL OF SOUTH AFRICA Case No: 018408 In the matter between: MB TECHNOLOGIES INVESTMENTS (PTY) LTD Primary Acquiring Firm AND SECUREDATA HOLDINGS LTD Primary Target Firm Panel : Dr Takalani Madima (Presiding Member) : Prof Imraan Valodia (Tribunal Member) : Anton Roskam (Tribunal Member) Heard on : 26 February 2014 Order Issued on : 26 February 2014 Reasons Issued on : 4 April 2014 Reasons for Decision Approval {1] On 26 February 2014 The Competition Tribunal (“the Tribunal”) unconditionally approved the acquisition of SecureData Holdings Ltd by MB Technologies Investments (Pty) Ltd.

[2]The reasons for approval of the proposed transaction follow below. Parties to the Transaction Primary acquiring firm (3] The primary acquiring firm is MB Technologies Investments (Pty) Ltd (“MB Technologies”), a company incorporated in terms of the laws of the Republic of South Africa. MB Technologies is controlled by Investec Bank Limited (“Investec Bank’) which is in turn controlled by Investec Limited (“Investec”), a company listed on the Johannesburg Securities Exchange (“JSE”). Investec’s largest shareholders are as follows: « Public Investment Corporation; e Investec Staff Share Schemes; ® Old Mutual; e ‘Old Mutual Group; and ® Alan Gray. (4) MB Technologies controls and whoily owns the following firms: e Advanced Channel Technologies (Pty) Ltd; @ Channel Capital (Pty) Ltd; e Channel Risk Management (Pty) Ltd; e Channelware (Pty) Ltd; e Tarsus Technologies (Pty) Ltd; e Printacom Technologies; e MBT Secretarial Services (Pty) Ltd; and * MBT Services (Pty) Ltd. Primary target firm

[5]{6] The primary target firm is SecureData Holdings Lid (“SecureData’), a company incorporated in terms of the laws of the Republic of South Africa and listed on the JSE. SecureData directly controls the following subsidiaries: e SecureData Administration (Pty) Ltd; e » ScureData Continuity (Pty) Ltd; and; * SecureData Security (Pty) Ltd. The five largest shareholders of SecureData are as follows: e 360 NE Asset Management (Pty) Ltd; « Treacle Investments (Pty) Ltd: e Rhys Summerton; e Treacle Fund I Trust; and « Golden Hind Partnership. Proposed Transaction

[7]The proposed transaction is structured as a Scheme of Arrangement in terms of section 114 of the Companies Act 71 of 2008 and a delisting. The first step in the transaction involves MB Technologies acquiring the entire issued share capital of SecureData. The second step involves SecureData delisting from the JSE. Post- merger, MB Technologies will hold the entire issued share capital of SecureData and will control SecureData. Rationale

[8]

[9]MB Technologies views the proposed acquisition of SecureData as an attractive business opportunity which is likely to increase diversification, synergies and lead to cost saving. SecureData is of the view that the specific business areas of the merging firms complement one another in that MB Technologies will play a role in driving SecureData’s strategy going forward. It also provides SecureData’s shareholders with a cash exit opportunity. Relevant Market and Impact on Competition {10] It]

[12]SecureData is operative in the information security sector, specifically as a distributor and seller of risk management solutions. MB Technologies, also operating in the IT sector, focuses rather on the sale and distribution of IT equipment. There thus exists a horizontal overlap in the national market for the distribution of information security products within the Information Technology (“IT”) sector. Post-merger the merged entity will hold a market share of about 20% (MB Technologies, the acquiring firm, holds less than 1% market share) and will remain constrained by other information security distributors such as Westcon (35%), Axiz Workgroup (20%), Unlimited Networks (10%) and others. The presence of viable alternative players in the market and the relative homogeneity of the product provide customers with a certain degree of countervailing power and this further militates against competition concems. Public Interest

[13]No public interest concerns arise from the proposed transaction, Conclusion [14]. In light of the above |: conclude that the proposed transaction Is unlikely to substantially prevent or lessen competition in tha national market for the distribution of information security products within the IT sector. Accordingly, | approve the transaction unconditionally. A APRIL 2014 DATE \ Dr Takalan! Madima Prof Imraan Valodia and Anton Roskam concurring Tribunal Researcher: Derrick Bowles/ Shannon Quinn For the merging parties: Natalie von Ey- Cliffe Dekker Hofmeyr Inc For the Commission: Tshegofatso Radinku