Johannesburg - Tile and sanitaryware manufacturer Italtile has approached the Competition Tribunal in an effort to revive its merger with Ceramic Industries, which was stopped by the Competition Commission at the end of last month.
The company said it had approached the tribunal as it believed that the commission got its facts wrong regarding the merger.
The chief executive, Nick Booth, said by taking up the ruling with the tribunal the company believed the previous judgment was based on inaccurate information.
He said the company’s latest attempt was aimed at clarifying the facts with hopes of a different ruling.
“We were taken aback by the ruling of the Competition Commission and we didn’t anticipate that the merger would not get a go-ahead,” said Booth. “We are in the view that the commission got it all wrong and that is why we have made fresh submissions to the Competition Tribunal.”
In April, Italtile announced that it had submitted a binding offer letter to Ceramic Industries to acquire the remaining shares it does not own through its wholly-owned subsidiary, Italtile Ceramics. Italtile wanted to acquire the remaining 75 percent controlling stake in Ceramic Industries for a proposed R3.75 billion.
Italtile, which owns retail brands such as CTM and TopT had intended to settle 50 percent of the acquisition in cash and undertake the rest in a renounceable rights offer at a price of R11.57 per share.
Italtile owns 20 percent stake in Ceramic and it is the largest client of Ceramic Industries. When passing judgment the commission said it believed that, should the merger proceed, there would be no viable alternatives for competitors in the downstream retail market.
However, the Italtile board dismissed the judgment. “We saw this as a simple merger of the same businesses but the commission saw it differently and we are disappointed with the results,” said Booth.
Ceramic Industries is the largest manufacturer of floor and wall tiles in southern Africa and Italtile is the JSE-listed tiles and bathroom company.
In the ruling, the commission said the proposed transaction would create a vertical overlap in the activities of the merging parties in relation to the upstream markets for the manufacture and supply of tiles, sanitaryware, baths and grout and adhesives and related products, and the downstream market for the retail sale of the products in South Africa.
“The merged entity could foreclose retailers by raising prices, reducing supplies or refusing outright to supply,” the commission ruled.
Booth said Italtile expected a response from the Competition Tribunal after 10 working days.
Italtile shares were 1.1 percent higher on Friday at R13.80.
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