absa group limited / woolworths financial services (pty) ltd

On 17 July 2008, the Tribunal approved the proposed merger between ABSA Group Limited ("ABSA") and Woolworths Financial Services (Pty) Ltd ("Woolworths FS"). The primary target firm in Woolworths FS, a wholly - owned subsidiary of Woolworths (Pty) Ltd, which in turn is a subsidiary of Woolworths Holdings.

In terms of the proposed transaction, ABSA will acquire 50% plus 1 ordinary share stake in Woolworths FS by means of a subscription for shares. ABSA considers this deal as an opportunity to increase its presence in the consumer finance sector in South Africa. For Woolworths FS, the transaction will enable it to become a leading consumer finance operation with one of the most comprehensive financial service offerings in the South African retail store network.

The Tribunal concluded that the combined post-merger market share would be less than 26.7% in the market for unsecured personal lending. In addition, in the credit card segment, the combined market share would be 27.6%. As Woolworths FS had less than a 2% market share in each of the market segments analysed, it was found that there would be a negligible market share accretion post merger. No foreclosure concerns arose. Accordingly, the Tribunal concluded that the proposed transaction would not result in a substantial lessening or prevention of competition.

Webber Wentzel Newsletter 6 August 2008