Competition Tribunal adjudicates merger of Dotsure and Badger
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DURBAN - THE COMPETITION Tribunal on Friday was considering the the merger of Badger through its subsidiary, Dotsure, acquiring the direct personal lines insurance business underwritten by The Hollard Insurance Company Limited, but no decision had yet been reached.
Last week the Tribunal said the Competition Commission had recommended to the it that the proposed merger be approved, subject to public interest-related conditions relating to employment and a greater spread of ownership and a proposed moratorium on merger specific retrenchments.
It also had to consider the establishment of an employee share scheme that would give workers an opportunity to benefit and participate in the ultimate ownership of the merged entity.
The target business comprises Hollard’s direct, personal lines insurance book consisting of short-term (non-life) personal line insurance. Badger was also a target firm because as a direct result of this transaction, if approved, Hollard would also acquire further shareholding and joint control in Badger.
On Friday, the Tribunal submissions in this regard from the Commission and the merger parties during the online hearing. However, the larger parts of the discussions were not open to the media and public.
Absa analyst and portfolio manager who also co-manages the Absa Core Equity Fund Cornette Van Zyl said that Santam remained the largest player in personal short-term insurance in South Africa. “And the other large listed insurance companies mostly have sizable businesses in this regard as well. So the proposed merged entity, although it will have meaningful market share, will not be largest,” said Van Zyl.
She said the issue with such a transaction was always the impact it would have on employees. “Naturally when businesses merge, management looks for synergies and opportunities to cut costs, and people may lose their jobs. I think that will be the focus of the Tribunal, not the size of the new entity.”