| Tue 20 Feb 2007, 15:03 | | PIK - Pick `n Pay Stores Ltd - Fruit & Veg City |
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PIK
PIK
PIK - Pick `n Pay Stores Ltd - Fruit & Veg City, Pick `N Pay, withdraw from
deal
Pick `n Pay Stores Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1968/008034/06)
Share code: PIK & ISIN: ZAE000005443
FRUIT & VEG CITY, PICK `N PAY, WITHDRAW FROM DEAL
F&VC cites `unacceptable` delays
(Cape Town, 20 February 2007) Fruit & Veg City and Pick `n Pay confirmed
today that they would not be pursuing their proposed deal following what
Fruit & Veg City`s managing director, Brian Coppin, has termed "an already
unacceptable regulatory delay with the daunting prospect of yet another
one".
The Competition Commission a fortnight ago recommended that the deal not be
approved.
Said Coppin: "We were incredibly excited about the opportunities for a small
business like ours, in partnership with South Africa`s top retailer.
"But in perspective, we announced our proposed deal eight months ago (June
2006). Small businesses simply can`t operate in an environment of
uncertainty and administrative burden for this length of time - it just
isn`t practical and frankly, nor is it fair. During these eight months,
decision-making has become increasingly difficult and operating normally
extremely frustrating.
"We discussed this extensively with Pick `n Pay and while they were very
keen on taking this further with a full presentation to the Tribunal, we
just couldn`t accept another delay, which could have well made matters
worse."
"We have worked incredibly hard to build up our business from scratch. Just
at the point where we believed we were able finally to realize our growth
aspirations, not only do we get a really unexpected - and what we believe to
be incorrect - recommendation from the Competition Commission, but it takes
eight months for them to come to a decision at all. We cannot believe this
evaluation could have been that complicated that it warranted this length of
time.
"Importantly, we do not believe, and nor do Pick `n Pay, that the
acquisition of our company would have in any way been bad for the consumer,
nor do we believe that it was anti-competitive."
Pick `n Pay CEO Nick Badminton said that the company was naturally
disappointed that the deal was not going to be pursued, but concurred with
Coppin on the length of time it took for the Commission to study the
proposed deal.
"We`ve never backed off from something we believe in and this would have
been no exception. We had no problem at all in taking our argument to the
Tribunal and felt we had more than a compelling case with the upside of the
acquisition clearly articulated. Apart from the fact that we believe there
was ample precedent in our industry, we did not believe this was anti-
competitive and felt sure that the Tribunal would eventually have approved
it when all the facts and arguments were placed at their disposal.
"More specifically, the finding by the Commission excluded the consideration
of both the independents and the informal market in its deliberations on
market size, which we believe is a considerable oversight, given the size
and scale of both the independent and informal sectors in this country.
Additionally, the Commission used statistics which we believe did not
account for retail group Spar`s franchises, which again skewed the picture
of the FMCG retail industry in South Africa.
"Having said that, we have to respect our partners and their decision, which
can`t have been an easy one. But we must appreciate the effect this - and
the prospect of another delay - is having and would have had on their
business going forward.
"The principle of mergers and acquisitions being evaluated by a regulatory
authority to ensure robust competition is a good one, but the process is
clearly flawed if it takes this length of time to come to a recommendation.
And that`s even before the next round of evaluations.
"In his Opening of Parliament address, President Mbeki said that government
would take a variety of steps to improve competition in the economy. He
referred specifically to lowering the cost of doing business and
strengthening the effectiveness of our competition authorities. We would
strongly support this. If our experience is anything to go by, we believe
this is long overdue.
"Our relationship with the Coppins is an extremely good one and going
forward, we will make sure it remains so."
This announcement has no material effect on the Headline Earnings of the
Pick `n Pay Group for this or subsequent financial years.
ENDS
For further information, please contact Tamra Veley on 083 251 3658.
Date: 20/02/2007 15:03:00 Produced by the JSE SENS Department.
