Grohe Luxembourg Four S.A (Grohe) intends to acquire 51 per cent of the issued share capital in Watertech – which will be jointly controlled by Grohe and Distribution and Warehousing Network Limited (Dawn) post the merger.
“Grohe is a company newly incorporated in Luxembourg and jointly controlled by Grohe Group S.a.r.l and Lixil Corporation whilst Watertech is a newly incorporated South African company,” the commission said.
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“In South Africa, the activities of the Grohe group and the Watertech overlap in the supply of taps, mixers and shower fittings. The commission accordingly assessed this market and found that the merger is unlikely to lead to a substantial prevention or lessening of competition.”
According to the commission, the merged entity will still face a competitive constraint from suppliers, including Hansgrohe, Tivoli Taps, MacNeil and Splashworks, in the South African market.
The commission further stated that concern around the possibility of production being shifted from South Africa to factories owned by the Grohe group has been repudiated by the parties involved.
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“The merging parties assured the commission that the merger will not have a negative effect on the public interest. The intentions of the merged entity with respect to the South African operations are set out in the plans and strategies to grow the manufacturing base in South Africa for exports,” it said.
“In this regard, the merged entity provided undertakings committing to maintaining and increasing current manufacturing levels and continuing to procure inputs from local suppliers. The commission concluded that that the proposed transaction has a positive impact on the public interest.”