The Namibia Competition Commission (NaCC) says it is still investigating the acquisition of cash-strapped Ellerines retail stores in Namibia by Lewis Stores Namibia.
The value of the proposed transaction is estimated at N$250 million. NaCC says it recently received notification for the transaction. The NaCC has a time limit of 30 days to conclude merger and acquisition cases from the date it receives the notification, unless there are outstanding matters that require extra time.
In November 2014, Lewis bought the Beares brand and 63 stores from Ellerine Holdings, the struggling subsidiary of the troubled African Bank Investments group.
It acquired a further 25 stores bearing the Beares and Ellerines brand in Botswana, 10 in Lesotho, 21 in Namibia and six in Swaziland that were absorbed into the group last month.
“The proposed [transaction] is still under investigation and the commission will only pronounce itself on the matter once the investigation is completed,” NaCC spokesperson Dina Gowases told New Era this week.
Ellerines Furnitures and its holding company Ellerine Holdings went into virtual bankruptcy in 2014 after it failed to recoup money from clients who bought things on credit, which had grave consequences for its credit lender and parent company, African Bank Investments.
The retail value of Ellerines shops outside South Africa was estimated at N$400 million in 2014.
Gowases said the commission’s decision will be guided by the Competition Act, specifically Section 47(2), which stipulates that the commission may base its determination of a proposed merger on any criteria it considers relevant to the circumstances involved.
Last week African Bank Investments reported that Ellerines continue to “trade at a loss” as consumers continue to be unable to meet instalment credit obligations, and “requires working capital funding from ABIL and Africa Bank.”
The statement went on to say that “as a consequence of the financial performance of Ellerine Furnishers Proprietary Limited a decision has been taken that no further funding would be provided by ABIL or African Bank to EF or Ellerine Holdings Limited.”
Gowases says NaCC will consider the extent to which the proposed merger would prevent or lessen competition or restrict trade or the provision of any service or endanger the continuity of supplies or services, and if it is likely to affect employment, or the ability of small undertakings – in particular small undertakings owned or controlled by historically disadvantaged persons – to gain access to or to be competitive in any market; and whether the proposed merger would affect the ability of national industries to compete in international markets.
“The commission will consider all relevant factors applicable to the proposed transaction in arriving at its decision,” Gowases explained.