Big Cell C recapitalisation deal approved

The Competition Commission announced that it has issued its conditional approval for a proposed acquisition of Cell C assets by Gatsby SPV.

“The Commission has recommended to the Competition Tribunal to conditionally approve the proposed transaction in which Gatsby SPV intends to acquire certain assets of the mobile network operator, Cell C,” the Commission said in a statement.

Gatsby is a special purpose vehicle (SPV) which was created specifically to accommodate the proposed acquisition of certain Cell C assets.

The organisation will be controlled by an as yet unformed trust, whose sole purpose will be to hold the issued share capital of Gatsby SPV.

“The Commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets,” the Commission said.

“The Commission further found that the proposed transaction does not raise any other public interest concerns.”

However, the Commission did acknowledge that the transaction may raise competition concerns, including the possibility of anticompetitive information exchange if the trustees included individuals from other mobile network operators.

“These concerns were not considered in the assessment of the proposed transaction because the trustees have not yet been appointed,” the Commission said.

To address this risk, the Commission said the proposed transaction should be approved subject to the condition that the Gatsby SPV and the trust will not be controlled by individuals from companies which compete or may compete with Cell C, as well as companies which have a customer-supplier relationship with Cell C.

Cell C responds

Cell C issued a statement in response to the Competition Commission’s approval of its recapitalisation, stating that it was pleased with the decision.

“This is an important step towards concluding a complex restructuring for the mobile operator,” Cell C said.

Cell C said it remains cautiously optimistic until the deal has been fully concluded and all requirements have been met.

“A recapitalisation is an important pillar of Cell C’s turnaround strategy,” said Cell C CEO Douglas Craigie Stevenson.

“We are being diligent and thorough to ensure it is a transaction that meets all conditions and continue to engage with all stakeholders.”

“In our minds, it is not done and there is still work to do, but we are pleased with the progress to date,” he said.

Mergers of firms in distress

This follows after Competition Commission Commissioner Tembinkosi Bonakele told the portfolio committee on Trade and Industry on 20 May that they have been working on mergers of firms in distress.

One of the prominent merger cases was related to Cell C, which Bonakele said had been in trouble for a while.

One day after this statement, the transaction involving the Gatsby special purpose vehicle has been approved by the Commission.

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Big Cell C recapitalisation deal approved