Transporters contest SA firm�s bid for 4MS
Isaac Pinielo | Tuesday December 13, 2016 18:00
The acquiring company, Transport Holdings is a logistics subsidiary of Imperial Holding Group of South Africa and is involved in carrying out large-scale transportation.
On the other hand 4MS Group, established as a citizen/driver empowerment scheme by Kgalagadi Breweries Limited (KBL), is in the businesses of ad hoc line haul transport to the general market and line haul transport services to KBL.
During a public hearing held by the Competition Authority (CA) last week, the operators warned that the proposed deal would boost the dominance of Transport Holdings and reduce the ability of other transport operators to compete.
Secretary of the Botswana Transport and Allied Workers Union (BOTAWU), Albert Simanyana said the acquisition of 4MS group by Transport Holdings would lead to loss of jobs for the many drivers who are employed by 4MS group.
“We fear that this transaction might pose serious problems to the people who are employed by 4MS group as this transaction is being carried out under devious circumstances,” he said.
General manager of Seabelo Group, Isaac Botlhale indicated that the acquisition was done in secrecy with 4MS Group not first seeking buyers locally.
“Why was it not made public so that we, as local operators can also bid to buy this company,” he questioned. He said if the transaction is approved, it will impoverish many Batswana who will be retrenched as a result of the deal. However, other industry players asserted that Transport Holdings is in cohorts with KBL to kill 4MS Group, saying that 4MS was forced out of business because of Transport Holdings.
Tatenda Kgomanyane of Armstrongs Attorneys, who is the legal representative handling the transaction had pleaded with the Competition Commission to approve the acquisition, noting that it is in the best interest of the 4MS Group, which she said is facing financial troubles. “The company gets about 97% of its revenue from KBL, but because of the policy change at KBL which included cost cutting measures, 4MS Group will be affected and might close down,” she said.
Kgomanyane also cited the 30% reduction in volumes by KBL as another factor that led to the financial doldrums that 4MS Group is experiencing, as well as the fact that there is only one year remaining for 4MS Group’s contract with KBL to come to an end.
“The company has a fleet of 23 trucks, which might all be rendered redundant due to the policy change by KBL and the 30% reduction in volumes,” she said.
Kgomanyane insisted that the acquisition of 4MS Group by Transport Holdings has no competition concerns, noting that the acquisition will only give the acquiring company a five percent market share.
“This will not make it (Transport Holdings) a dominant company since its market share is currently below the 20% threshold of dominant companies,” she argued.
Kgomanyane further pointed out that the acquisition would alleviate 4MS Group of its financial problems and further assist it to pay retrenchment packages to the employees who will be retrenched after the acquisition.
She also noted that Transport Holdings will continue with the remaining one year of the contract that 4MS Group had with KBL.
Meanwhile, Transport Holdings managing director, Anthony Lee stated that he was unable to commit himself as to whether his company will hire all the employees that would be retrenched by 4MS Group.
Michael Stoneham, 4MS Group finance director said the company will lose revenue due to the change in policy of the KBL. He said the company has a P14 million liabilities noting that it faces a bleak future, which is not good for it to continue doing business.
The company approached Transport Holdings to come to their rescue.
After the hearing, the CA urged the public and other interested parties not party to the proposed acquisition to voluntarily submit to the authority any documentation, affidavit, statement or other relevant information in respect of the proposed acquisition pending the decision whose date has not been announced.