Exam (elaborations)
LML4802 PORTFOLIO MEMO
- Institution
- University Of South Africa (Unisa)
LML4802 PORTFOLIO MEMO
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LML4802PORTFOLIO MEMO
, QUESTION 1
1.1 Massmart, the owner of Makro and Game stores, announced that it would
sell its non-core business to the Shoprite Group for over R1 billion. The sale will
ensure that Shoprite owns Cambridge Food, Rhino, Massfresh and 12 Cash &
Carry stores.
1.1.1 Discuss whether the above transaction would constitute a merger or not.
If it is a merger, discuss the relevant procedure that needs to be followed for the
merger to be approved. In the alternative, if it is not a merger, provide reasons
for your answer and how the parties should approach the transaction.(5)
Yes, this is a merger. The Act' defines the term "merger" widely to mean the direct or
indirect acquisition or establishment of control by one or more firms over the whole or
part of the business of another firm.
The Act makes provision for the compulsory notification of all intermediate and large
mergers (s 13A(1)). A representative trade union representing the employees of any
of the merging firms must also be notified of the proposed merger by both the acquiring
firm and the target firm (s 13A(2)). Representations by the trade union can play a
significant role when the proposed merger is evaluated on public interest grounds.
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