Truck operators oppose 4MS acquisition

SHARE   |   Monday, 12 December 2016   |   By Kabelo Adamson
Truck operators oppose 4MS acquisition

Some local truck operators are objecting to the acquisition of assets belonging to trucking company known as 4MS Group Holdings (Pty) Ltd by Transport Holdings (TH) (Pty) Ltd. This emerged during a public hearing before the Competition Authority (CA) on Friday morning. 4MS Ltd, according to the particulars provided is a line Haul Company which was formed by former employees of Kgalagadi Breweries Limited (KBL) and was established through the assistance of KBL as some form citizen empowerment scheme. Now that 4MS is said to be on the red as it owes over P18 million to creditors, the company is now looking to sell its assets to TH Ltd on willing buyer willing seller basis. The company, it emerged, has been providing line haul services to KBL since 2004. However, most truck operators who attended the Friday hearing read that there is collusion between KBL and TH Ltd and wondered why the latter was chosen ahead of other companies or whether 4MS had among other options considered reducing some of its fleets rather than sell off the whole assets. Industry players pleaded with the Authority not to give the transaction a go ahead as that would work against the principles of citizen empowerment. According to the information that emerged during the hearing, 4MS’ contract with KBL has a year remaining on it thereafter the beer company is expected to implement its new procurement policy and would invite other companies to tender.

The fear among truck operators is that after acquiring the assets of 4MS which include 23 trucks, TH Ltd may have upper advantage over others and may end up being the preferred bidder ahead of others. It was also indicated that TH Ltd is already transporting some KBL volumes to Maun. “If the deal is allowed Batswana will remain poor as they are; right now we are all crammed at Bokomo. Let the opportunity be given to Batswana,” said Seabelo Tlhaselo, Director of Seabelo Group. A legal advisor representing both TH Ltd and 4MS, Tatenda Kgomanyane, said SAB Miller which is a technical partner in the operations of KBL and a largest shareholder, is being acquired by another company, a Belgian Brewer, AB inBev. She said the transaction is likely to bring major changes to KBL operations, including new procurement policies and therefore it made sense for 4MS to sell its assets to TH Ltd as the former is going through a financial difficulty. According to Kgomanyane, the transaction would save 4MS as the funds raised from the sale of its assets would go towards retrenchment packages of the 40 employees who are to be retrenched. The deal if given the green light, the lawyer said, would not result in a monopoly since the two companies hold small market shares - TH Ltd with 5 percent and 4MS with 1 percent – way below the 25 percent threshold considered a dominance benchmark. Looking at the trend in handling of mergers and acquisitions done by the authority, the deal is highly likely to be given a green light, probably with conditions. The CA annual report which was launched on Monday shows that in the past financial year, of the 33 mergers handled, all were approved either with conditions or without conditions while none were turned down. The report shows most mergers are taking place in the retail space while transportation is one of the least sectors with mergers. There was no merger in this sector in past year.

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