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FWD
FWD
FWD - Freeworld Coatings Limited - Freeworld board response to Competition
Commission ruling
FREEWORLD COATINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2007/021624/06
Share code: FWD ISIN: ZAE000109450
("Freeworld" or the "Company")
FREEWORLD BOARD RESPONSE TO COMPETITION COMMISSION RULING IN RESPECT OF THE
OFFER BY KANSAI PAINT CO LIMITED ("KANSAI") TO ACQUIRE ALL THE SHARES IN
FREEWORLD AT A PRICE OF R12 PER SHARE ("KANSAI OFFER" OR THE "TRANSACTION")
The Freeworld board ("Board") has considered and accepts the Competition
Commission`s conditional approval of the Kansai offer. The Board has at no
stage sought to oppose the transaction and indeed in the circular to
shareholders dated 17 January 2011 (the "Freeworld circular") and on numerous
occasions stated in clear language that the price of R12.00 per share is fair
and reasonable.
From the earliest contact with Kansai the Board has had a set of concerns about
the Kansai offer relating to competition and public interest issues in terms
of the Competition Act. These areas of concern were set out in the Freeworld
circular to shareholders. The Board had a duty to raise these concerns with
the competition authorities.
The conditions imposed by the Competition Commission deal comprehensively
with these concerns, both in terms of the risk of unilateral and coordinated
(market) action, as well as concerns regarding employment, the extent of local
manufacture and original research and development. The risk of unilateral and
coordinated action is avoided by the ordered divestiture by the merged entity
of Freeworld`s entire automotive interests and the conditions relating to
certain potential arrangements with PPG Industries Inc. in South Africa. Each
of the public interest concerns has been addressed with explicit conditions
preserving employment, local manufacture, and research and development. In
addition the Competition Commission has also imposed the condition that Kansai
establish OEM automotive coatings facilities in South Africa within 5 years
(absent unforeseen circumstances).
The Board is fully satisfied that it has discharged its duties as a corporate
citizen, and that the transaction, on the basis on which it was approved by the
Competition Commission is consistent with national law, and thus Freeworld will
not appeal the Competition Commission decision.
The Board is gratified that Kansai has accepted the conditions imposed by the
Competition Commission and that shareholders will now receive the offer price
of R12 for their shares. The Board will do all in its power to ensure that
the transaction is completed promptly and smoothly on the basis of the
conditions imposed by the Competition Commission. To this end the Board will
be meeting with Kansai early next week to understand their position as the
incoming controlling shareholder and to cooperate in such completion.
Johannesburg
21 April 2011
Merchant bank and sponsor to Freeworld
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Attorneys to Freeworld
Read Hope Phillips Thomas & Cadman Incorporated
Competition law advisors to Freeworld
Nortons Inc.
Date: 21/04/2011 14:03:58 Produced by the JSE SENS Department.
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