SOUTH AFRICA: The Distillers-Stellenbosch Farmers' Winery (SFW) merger temporarily on ice

By Arnold Kirkby | 20 November 2000

SFW was due to delist on the Johannesburg Stock Exchange at close of office today and be listed jointly with Distillers Corporation on Monday in a deal valued at R515 million ($68m)."We have postponed the delisting on the JSE until next Friday and are waiting with bated breath for the judgement regarding the interdict brought in the Cape High Court by Seagram SA," said SFW spokesman Bennie Howard."If the judgement is given early next week and is in our favour then we will proceed with the delisting at the end of next week," said Howard.Justice Thabani Jali heard Seagram's application for an interdict against the merger on Friday 10 November.Counsel for both parties argued the merits of the South African Competitions Act and whether it applied to the merger.Distillers Corp and SFW gave notice of intent to merge in April this year and have been involved in negotiations since. They formalised the announcement in the media in mid-September and the actions against the merger have sprouted since then.Distillers-SFW argued that because both companies had the same majority shareholders, namely the Rupert owned Rembrandt Group and KWV, through a holding company Rembrandt-KWV Investments and that such a merger was tantamount to a restructuring of the group. South African Breweries also has a 30% stake in each company.Seagram countered that both companies were separate legal entities, which competed against each other for many years in South Africa. As such they were not just restructuring, but merging and so forming a virtual monopoly in the South African wine and spirits market.

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SFW was due to delist on the Johannesburg Stock Exchange at close of office today and be listed jointly with Distillers Corporation on Monday in a deal valued at R515 million ($68m)."We have postponed the delisting on the JSE until next Friday and are waiting with bated breath for the judgement regarding the interdict brought in the Cape High Court by Seagram SA," said SFW spokesman Bennie Howard."If the judgement is given early next week and is in our favour then we will proceed with the delisting at the end of next week," said Howard.Justice Thabani Jali heard Seagram's application for an interdict against the merger on Friday 10 November.Counsel for both parties argued the merits of the South African Competitions Act and whether it applied to the merger.Distillers Corp and SFW gave notice of intent to merge in April this year and have been involved in negotiations since. They formalised the announcement in the media in mid-September and the actions against the merger have sprouted since then.Distillers-SFW argued that because both companies had the same majority shareholders, namely the Rupert owned Rembrandt Group and KWV, through a holding company Rembrandt-KWV Investments and that such a merger was tantamount to a restructuring of the group. South African Breweries also has a 30% stake in each company.Seagram countered that both companies were separate legal entities, which competed against each other for many years in South Africa. As such they were not just restructuring, but merging and so forming a virtual monopoly in the South African wine and spirits market.

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