WAR ERUPTS OVER 4MS ACQUISITION

WAR ERUPTS OVER 4MS ACQUISITION

Local trucking companies, led by Seabelo Tlhaselo have unleashed a bare-knuckle fight against Transport Holdings, lobbying for the Competition Authority (CA) to reject a the rucking company’s bid to acquire 4MS Group Holdings (Pty) Ltd, a fellow transport and logistics firm. • Seabelo dares Transport Holdings • Transport Holdings wants to ‘dominate’ transport industry • Seabelo wants 4MS to be acquired by a Botswana company

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Local trucking companies, led by Seabelo Tlhaselo have unleashed a bare-knuckle fight against Transport Holdings, lobbying for the Competition Authority (CA) to reject a the rucking company’s bid to acquire 4MS Group Holdings (Pty) Ltd, a fellow transport and logistics firm.

 

 
At the centre of the combat is Seabelo Group of Companies, led by its Managing Director and owner, Seabelo Tlhaselo, Truck Hire who with other local trucking companies who dares CA to approve TH Holdings’ acquisition of 4MS.They say the acquisition as a plot by TH Holdings to prune out competition, dominate Botswana’s transport & logistic industry and consequently defeat citizen empowerment drive.

 

 
The Competition Authority (CA) has received and heard expressions of the proposed transaction which involves the acquisition of assets and cession of the main contracts belonging to 4MS Group Holdings (Pty) Ltd by Transport Holdings Ltd.

 

 
Seabelo group of companies argues that the sale of 4MS was not advertised giving TH a favourably unfair hand to dominate the market. “If the deal is allowed, Batswana will remain poor as they are,” Seabelo Tlhaselo, Director of Seabelo Group told CA adding that the opportunity should be given to Batswana.

 

 
Currently, Transport Holdings wholly owns Express Cartage (Pty) Ltd which is engaged in general consolidation transportation and provides line haul for some contract customers. The company also has a 70 percent stake in Imperilog Botswana, an agent for global freight forwarders and engaged in customs clearing services.

 

 
The target company, 4MS is in the businesses of ad hoc line haul transport to the general market and line haul transport services to Kgalagadi Breweries Limited (KBL), an associate of the Botswana Stock Exchange (BSE) listed beer brewing firm, Sechaba Breweries Holdings Limited.

 

 
4MS, was established as a Citizen/ Driver Empowerment Scheme by KBL, a unit of Sechaba Breweries, which is currently its main contractor.
Of significant interest is that, Transport Holdings acquired the business of Mulbridge Transport Ltd early last year which was approved by the Competition Authority. Mulbridge also had secured a contract with KBL. The Mergers and Acquisition has made it clear that Mulbridge and 4MS are big competitors who dominate deliveries at the local brewery. Should TH Holdings acquire 4MS, then TH Holdings will be the sole largest service provider in the local breweries industry.

 

 
TH has been knocking at the doors of 4MS countless times to buy them out and was never made public by both companies until the latest bid, according to officials from both parties. The target company in turn rejected tabled offers.

 

 
Local couriers who joined the fight argue that if the Mergers and Acquisition committee gives a green light to the acquisition, it would reverse the much touted citizen empowerment given TH Holdings’ broad financial muscle and resource base. The company owns subsidiaries that have been carrying out large scale transportation in Botswana since the 1970s. Industry players say most of their companies are shunned and much recognition is given to TH when tenders are floated.

 

 
TH Holdings, together with its subsidiaries operate in Botswana, South Africa, Mozambique and Namibia.
TH Holdings which is incorporated in Botswana is owned 80 percent by Imperial Holding Group which is incorporated in South Africa. The remaining 20 percent is held by Anthony Lee, the incumbent Managing Director (MD) of the company.

 

 
While CA is still assessing the acquisition, it has raised concerns that if TH procures 4MS assets it will mean the company has an upper hand in terms of trucks to dwarf local industry players with limited asset base. In other words, if a tender is floated, the argument is that will most likely gobble them up while competitors are overlooked.
The acquisition will see TH add 4MS’ 23 trucks to their fleet. Interestingly the company will only acquire assets and did not commit to securing 40+ jobs which will be lost if the company winds up.

 

 
The company’s legal adviser Tatenda Kgamanyane was quick to qualify the acquisition, pointing out that TH holding occupies only 5 percent of the market share, while 4MS squats on 1 percent of the turf. “Both parties are not even dominant. If the acquisition sees light it will be 6 percent,” she said emphasising that the threshold of market dominance is exceeds 20 percent.

 

 
Further, Kgamanyane said the acquisition was prompted by 4MS’ financial woes which could see the company collapse, sending employees in limbo. The company is currently struggling to service over P18 million debt arising from bank loans used to procure trucks, officials from the company disclosed during CA hearing.

 

 
Industry players who viewed this as a plot between KBL and TH holding argued that instead of merging with TH they could have reduced fleet and continued operating.
Further, 4MS contract with KBL, driving more than 19 percent of the company’s revenue is hanging by thread with under a year before it elapses amid uncertainty over its renewal. Already, KBL, following the SAB miller acquisition by Anheuser-Busch InBev, the world’s largest brewer, has announced that when the contract expires next year 2017 it will introduce tender procurement process which may see 4MS losing its spine of revenue. Since 2004, KBL has been renewing 4MS contract every 5 years.

 

 
In total, Kgamanyane said 4MS may lose more business given that over 30 percent of KBL products are likely be transported by rail for cost efficiency in future.