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Edcon handed a lifeline in bid to save jobs

Apr 30 2019 17:19

The Competition Commission has recommended to the Competition Tribunal that the proposed acquisition of Edgars Consolidated Stores by shelf company New HoldCo should be approved, arguing it would give the ailing retailer a much-needed lifeline and possibly help avoid job losses. 

In a statement issued on Tuesday, the Commission said it found that the proposed transaction was unlikely to result in a substantial prevention or lessening of competition in the relevant markets. 

Rather, Competition Commissioner Tembinkosi Bonakele said the Commission believed it would have an "overall positive effect on employment, particularly on the retail industrial sector, because it seeks to preserve job levels within the Edcon Group. 

"The group intends to employ additional staff in the future. A significant number of Edcon employees could lose their employment were the business to be placed under business rescue proceedings if the acquisition is not approved," Bonakele added.

The proposed transaction follows a failed attempt to restructure the Edcon Group in 2016.  

The Edcon Group and the Economic Development Department (EDD) had agreed on certain conditions aimed at promoting BEE, local procurement and preserving employment.

The Commission has recommended that the merger is approved subject to such conditions.

New HoldCo has no previous operations or activities in South Africa and has been established for the purposes of acquiring the entire issued share capital of the Edcon Group, the Commission said.

The shareholders of New HoldCo comprise local and international financial investors in the form of private equity investments firms and banks. None of the shareholders conduct any clothing retail activities or exercise any form of control over New HoldCo, the statement added.

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