Coricraft to go ahead with Dial-a-Bed acquisition - CNBC Africa

Coricraft to go ahead with Dial-a-Bed acquisition

Southern Africa

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Commission approves Coricraft's acquisition of Dial-a-Bed. PHOTOS:

Dial-a-Bed, a division of Ellerine Furnishers and an indirect subsidiary of African Bank Investments Limited (ABIL), is a specialist supplier of bed sets and mattresses.

The Commission said that the sale of Dial-a-Bed is as a result of Ellerines undergoing business rescue proceedings. Practitioners believe that the sale of Ellerine’s assets, brands or divisions may yield a better outcome for the company than an immediate liquidation.

(READ MORE: African Bank's Ellerines applies for business rescue)

This comes after [DATA ABL:ABIL] was placed under curatorship on the 10 August 2014 due to financial troubles.

Initially, the commission thought that there may be a horizontal overlap in the proposed transaction as Coricraft and Dial-a-Bed both sell bed sets and mattresses.

“The Commission found that the proposed transaction is unlikely to substantially prevent or lessen competition in the sale of bed sets and mattresses in South Africa. This is because there are a number of players that will continue to constrain the merged entity, thus presenting alternatives to customers,” said the Commission in a statement.

(READ MORE: How aggressive lending came back to bite S.African bank ABIL)

The body also believes that the proposed transaction provides an opportunity for Dial-a-Bed to save a number of jobs as Ellerines is set to retrench its entire workforce of 7,060.  

Coricraft has also offered employment to 18 employees who will be affected in the closure of Ellerine’s non-viable stores.

“This transaction saves a substantial number of jobs and provides certainty for the affected employees. In addition, the Commission imposed conditions to address potential job losses”, said acting deputy commissioner, Hardin Ratshisusu.

Plans are also currently underway for furniture brand Lewis to acquire some Beares’ stores.

(WATCH VIDEO: The doom & gloom of Ellerines )