Deal includes G&W Base & Industrial Minerals.

The Competition Commission has recommended that the Competition Tribunal approve the proposed transaction whereby Leif 853 intends to acquire Zimco, with conditions. The primary acquiring firm is Leif 853. Leif 853 is jointly controlled by AutoX Proprietary Limited and Trinitas Equity Partners Proprietary Limited. AutoX is controlled by Trinitas Fund General Partner Proprietary Limited in its capacity as a juristic representative of Trinitas Private Equity Proprietary Limited.

The acquiring group, through AutoX, is a manufacturer and supplier of automotive lead acid batteries. AutoX supplies automotive lead acid batteries to both original equipment manufacturers (OEMs) and independent aftermarket customers. AutoX supplies automotive batteries to customers in South Africa and other African countries.

The primary target firm is Zimco. Zimco is controlled by H.J Enthoven & Sons Limited, a company incorporated in England and Wales. Zimco controls the following firms: Castle Lead Works Zambia Ltd, G&W Base & Industrial Minerals (Pty) Ltd t/a G&W Minerals Resources, Sondor Performance Foams (Pty) Ltd and Africa Anodes (Pty) Ltd.

The Target Group is active in the manufacturing of secondary lead alloy. In this regard, the Target Group operates a smelter wherein it manufactures secondary lead alloy for supply to the local automotive, mining, and cable industries as well as selected export markets. In the manufacturing of secondary lead alloy, the Target Group gets scrap batteries and scrap lead alloy from several battery suppliers and recycles these into secondary lead alloy through the smelting process. The Target Group also buys scrap batteries from independent scrap battery collectors who collect old batteries from individuals.

The Commission found that there is vertical overlap between the activities of the merging parties in that the Target Group is active in the manufacturing of secondary lead alloys which are used as an input in the manufacturing of automotive lead acid batteries by Auto X (the Acquiring Group) and its competitors. The proposed merger raised significant input foreclosure concerns as the Target Group is the largest manufacturer and supplier of secondary lead alloy in South Africa. Manufacturers of automotive lead acid batteries rely on the Target Group for the supply of secondary lead alloy to varying degrees, with one manufacturer relying solely on the Target Group for its secondary lead alloy supply. The manufacturers of lead acid batteries purchase secondary lead alloy from the Target Group through Lead Supply Agreements or Toll Manufacturing Agreements in terms of which these customers supply scrap batteries to the Target Group which in turn manufactures secondary lead alloy for these customers and charges them a tolling fee.

To remedy the input foreclosure concerns, the Commission and the merger parties agreed to conditions that the parties would continue to honour existing supply agreements with automotive battery manufacturers and, in addition, extend these supply agreements for a further period of five years following the expiry of the existing supply agreements.

The Commission and the merger parties also agreed to conditions that no employees would be retrenched as a result of the merger for a period of 24 months and that the Acquiring Group will make investments to increase or expand the merged entity’s operations. The Commission further found that the proposed transaction does not raise substantial public interest concerns.

G&W Mineral Resources, is a member of the Zimco group of companies in South Africa which is a wholly owned subsidiary of the Ecobat Technologies group in the UK. G&W Mineral Resources is the leading supplier of specialised industrial minerals in South Africa and has been servicing the needs of both local and Sub-Saharan customers for more than 65 years.

G&W Mineral Resources supplies more than 70 different products to a wide range of industries, including the foundry industry, and exports to Sub-Saharan Africa, as well as marketing a range of specialised industrial minerals and other products that are sourced both locally and internationally. These products are processed at the company’s Wadeville plant and distributed directly to customers.

Matsopa Minerals, a subsidiary of G&W Mineral Resources, is responsible for all mining activities and as such operates six mines in South Africa and Mozambique.