Competition Tribunal approves Transaction Capital and WeBuyCars deal

SOUTH AFRICA – The Competition Tribunal of South Africa has given the green light for Johannesburg Stock Exchange-listed Transaction Capital to buy a controlling 74.9% stake in South African online car marketplace WeBuyCars.

The deal comes after Transaction Capital Motor Holdco, a subsidiary of Transaction Capital, in 2020, acquired a 49.9% non-controlling stake in the business.

Transaction Capital said at the time of the 49.9% stake acquisition that it would pay a maximum of R1.84 billion (US$124.4 million) for the stake, based on an enterprise value of WeBuyCars of R3.69 billion (US$249.4 million) and said, too, that it had the option to take a controlling stake at a future date.

That deal came soon after the competition authorities blocked Naspers from buying a 60% controlling stake WeBuyCars, warning the combination would harm competition.

The Competition Commission, which investigates and assesses large mergers before referring them to the tribunal for a decision, recommended that the proposed transaction be prohibited as, it said, it was “likely to substantially prevent or lessen competition.”

The merging parties opposed the commission’s recommendation and disputed its theories of harm to competition and its ultimate conclusions and argued that the proposed transaction should be approved subject to certain conditions they had tabled, but their arguments were rejected by the tribunal.

WeBuyCars buys and sells second-hand vehicles and also acts as an agent in providing insurance products, service and maintenance plans, car-tracking services, and vehicle finance.

“The tribunal has concluded that the transaction is unlikely to substantially prevent or lessen competition in any market in South Africa. Furthermore, the merger does not raise any public interest concerns. The tribunal has, therefore, approved the merger without conditions,” the regulator said in a statement.

“The tribunal has concluded that the transaction is unlikely to substantially prevent or lessen competition in any market in South Africa

In May 2021, Transaction Capital announced that it was in talks to increase its stake in WeBuyCars to 74.9%, a move that would give it control over the South African online car marketplace.

“Transaction Capital Motor Holdco is in “formal negotiations” with WBC Holdings, the holding company of WeBuyCars, and its shareholders to “conclude a transaction in the short term that will result in TCMH holding 74.9% of the shares in and acquiring control of WBC Holdco,” it said.

WeBuyCars buys and sells used vehicles and uses data- and technology-led e-commerce and physical infrastructure, supported by a national footprint of “vehicle supermarkets” and “buying pods”.

News of the plan to increase its stake came just nine months after Transaction Capital announced it was buying a 49.9% non-controlling stake in WeBuyCars.

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