Clicks and Sorbet deal gets the greenlight: Competition Commission

 ·15 May 2023

The Competition Commission of South Africa (CCSA) has recommended the Competition Tribunal to approve Clicks Investments’ acquisition of Sorbet Holdings from Old Mutual Private Equity.

The CCSA held its ordinary meetings on 11 April 2023 and 9 May 2023, to make decisions on matters brought to it by public and corporate applicants in terms of the Competition Act, including the Clicks and Sorbet deal.

In November, the Clicks Group said that it had acquired the beauty company for a cash consideration of R105 million.

The CCSA said that the proposed transaction will probably not lessen the competition in South Africa – adding that it does not raise any other public interest concerns.

It said that the Clicks Group – which controls Clicks Investments – will be responsible for designing and developing the sorbet-branded beauty products and contracts while a third party makes the products. The Sorbet-branded products beauty products will be sold at the Clicks Group’s stores and website.

However, the takeover will only include a select group of stores – “the target group” –  including Sorbet Experience, Sorbet Man, Sorbet Man Woodlands and Candi and Co-Professional Salons.

The target group is a franchisor of the Sorbet brand with just under 200 franchised salons which are operated independently by several franchisees (“Sorbet Independent Salons”).

The target group also sells Sorbet-branded beauty products to Sorbet Independent Salon and the corporate Sorbet Salons, with the Sorbet Independent Salons also selling other brands from third-party manufacturers.

The Clicks Group will not acquire Sorbet Independent Salons, and these will operate independently from the relevant franchisee.

Moreover, to address concerns regarding the lessening of competition, Clicks Investments will fund up to half the start-up costs for at least five more franchisees from historically disadvantaged groups.

Clicks Investments will also ensure that at least 50% of franchise stores will have at least 50% ownership from historically disadvantaged persons (HDPs) within five years.

Clicks Investments and Sorbet Holdings will also increase local manufacturing of Sorbet-branded products, while Clicks Investments will also hold 10,000 training sessions for Sorbet franchisees or their employees.

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